Do You Need Rental Car Coverage on Your Car Insurance Policy?

One of the very common offerings amongst the many you can optionally get with your car insurance policy is rental car coverage. This is not a required coverage but is something you can usually opt for if you wish. What this type of coverage addition does is to pay for a rental car if your car is in the shop for repairs for an extended period of time.

But is this type of coverage worth it? There is no correct answer to this question, so you need to look at what it provides and make a decision about whether or not you need or would like this additional level of coverage. There are many ways this type of coverage can be used, so let’s take a look at the various scenarios

Your car is involved in an accident and will be required to be in the shop or garage for a period of time for repairs. Usually this period of time needs to be at least a few days, since this coverage could not be used if repairs can be completed in the same day. This optional insurance coverage will pay for a rental car for you to use while your car is being repaired.

But there are multiple problems with this. First of all is your deductible. The amount of the deductible is subtracted from the cost of the repairs plus the cost of the rental car (if you have this coverage). So if your deductible is $500, the cost of repairs is $3000 and the cost of the car rental is $300, you are not reimbursed $3300 but only $2800 to account for your $500 deductible.

But there is a brighter side to this as well. If the other driver got the ticket and was at fault in the accident, then the other insurance company is liable to pay for the repairs, including your deductible, and if you have rental car coverage, also for that.

Unfortunately, this gets a bit more complicated. First of all, the amount you pay for rental car coverage is usually has a limit, say $750. If the cost of the rental is more than the defined ceiling amount, you are required to pay the additional amount. Also, your insurance company will only reimburse for a “similar” car. So if your VW is in the shop, your insurance company will only reimburse you for a “similar” car like a compact, and would not reimburse you for your rental of a Corvette.

Be very aware of what the car rental agency is going to charge you for the rental car. If your insurance coverage will only reimburse say $25 a day for the rental car, you may end up paying portions of it if the car rental company is charging you $32 a day.

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