Imagine you had the misfortune of being in an auto accident and find your car will need to be in the local body shop for a couple of weeks for repairs to be completed.
How will you get around in the meantime?
Can you afford to pay out-of-pocket for a rental car?
If not, you may want to consider purchasing rental reimbursement coverage.
What is rental reimbursement coverage?
Rental reimbursement is an optional coverage you can add to your Michigan auto insurance policy that helps pay for a rental car if your car needs repairs that are covered by your insurance.
It’s important to note rental reimbursement coverage only applies when your insurance policy is paying the cost for covered damages to your vehicle, which would involve a comprehensive or collision claim. Rental reimbursement does not apply if your car is out of service due to routine maintenance.
How does rental reimbursement coverage work?
There is no deductible for rental reimbursement coverage; however, there is both a daily dollar limit and a limit to the number of days for which an insurance company will pay for a rental car. You can choose your daily coverage limit, ranging from $20 – $150 per day, while the time period rental reimbursement benefits are available is typically limited to a maximum of 30 days.
If you have rental reimbursement coverage the insurance adjuster handling your claim can usually make arrangements with the rental company to directly pay the portion of rental car costs covered by your insurance, saving you the inconvenience of paying directly and waiting to be reimbursed.
Is rental reimbursement a worthwhile coverage to buy?
As a general rule, you would come out ahead – if you were in an accident the national average of once every 10 years – to add the cost of rental reimbursement coverage to your emergency fund compared to purchasing this coverage. The reality, though, is most people don’t have a substantial emergency fund. If you don’t have alternate transportation readily available and the cost of a rental car would put a significant dent in your checkbook it may be worthwhile to add rental reimbursement coverage to your auto policy.