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What is Rental Reimbursement?

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  • Written By: Mary McMahon
  • Edited By: Kristen Osborne
  • Last Modified Date: 17 September 2016
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A rental reimbursement is a reimbursement of costs associated with renting a vehicle to temporarily replace one that has been a destroyed or severely damaged. It is provided by an insurance company if a driver opted for the rental reimbursement coverage. The obvious advantage is avoiding the high price of paying for a rental while waiting for vehicle repair or replacement, while the disadvantage is the potential of paying for this service and never having to use it.

When an insurance policy for a driver is generated, the driver needs to purchase minimum baseline coverage to meet regulatory requirements, and can then choose from a library of additional options. Many drivers choose to do things like increasing the amount of coverage and can add on features like towing, glass, rental reimbursement, and so forth. The agent may be able to offer a package deal for certain add-ons purchased together, lowering their price.

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Drivers who select the rental reimbursement coverage will be eligible for reimbursement from the insurance company if they can prove a rental is connected with a covered accident. They do not receive refunds for doing things like renting cars while traveling. Certain restrictions may also be put in place; generally, for example, the reimbursement covers rental of a vehicle of like kind, unless none were available. Thus, a person with a family sedan couldn't rent a sports car and qualify for a full reimbursement for the rental price, and the insurance company may just provide a baseline allowance per day.

The insurance company may have other restrictions on a rental reimbursement, such as the number of days it will pay for. If a car is being repaired, usually people need to return the rental as soon as the repairs are over. People replacing their cars with an insurance settlement will be offered a grace period to find a new car. If they cannot find a car within the grace period, they will not be reimbursed for additional rental days. It is advisable to read the terms and conditions of the rental reimbursement clause carefully to make sure it is fully understood.

People with existing coverage who want to add a rental reimbursement can do so by calling their agents and asking to have it added. It will take effect immediately, and an updated bill will be sent to ask the customer to pay the difference in coverage. People concerned about price can ask about available packages or the different kinds of rental reimbursement coverage that may be available; for reduced coverage, people will pay less.

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