What is Rental Car Reimbursement and Why You Need It

Drivers in Massachusetts know, that accidents can and do happen all the time. We hope you never have an accident but it’s good to be prepared, just in case. One important step McSweeney & Ricci recommends is to purchase rental car reimbursement (also referred to as Substitute Transportation Coverage), in addition to your car insurance policy.

Rental car reimbursement can be added as an optional rider or endorsement to your auto insurance policy. Substitute Transportation Coverage reimburses you for necessary car rental or transportation costs such as uber, taxi, bus and train fare, while your car undergoes covered repairs. Substitute transportation coverage typically costs between $60 and $100 annually. How much and how long a rental car is paid for by your insurance, depends on the type and amount of the endorsement and the type of rental car you rent.

How Much Rental Car Reimbursement Should I purchase?

McSweeney & Ricci recommends purchasing this coverage in limits of:

  • $30 per day for a total of $900 or
  • $45 per day for a total of $1350
  • $100 per day up to a maximum of $3,000

Coverage can be purchase in increments of $15 per day. However, you should be aware that a very basic rental car costs at least $30 per day and SUV’s cost more, so lower limits may result in having to pay out of pocket for the balance.

car rental reimbursement

Does my insurance cover me while I’m driving a rental car?

If you purchased comprehensive and collision coverage as part of your car insurance, it will guard against any damage you do to the rental car itself. Your auto insurance typically provides coverage if you cause injury or property damage, while driving a rental vehicle. However, if you damage the rental car you are driving, your insurance typically won’t pay for “loss of use” while the rental is being repaired. Also, if you total the rental vehicle, your insurance would only pay actual cash value as opposed to replacement value.

Should I purchase the coverage offered by the rental car company?

Coverage offered by a rental car company is not insurance, it is a collision damage waiver. The waiver is an agreement on behalf of the rental company not to file a claim against you or your insurance company, if their rental vehicle is damaged or stolen. Your McSweeney & Ricci Account Manager will review your auto policy, to see if you have purchased comprehensive and collision coverage as part of your car insurance.

Your McSweeney & Ricci Account Manager can answer any questions you may have surrounding rental car coverage and can make sure you are fully protected while driving a rental. We’re experts in home and auto insurance as well as business insurance. Call us at (844) 501-1359 or send us an email.

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