Business insurance

Money and the Law: Limits Vary by Car Rental Reimbursement Insurance | Business

From practicing law, I’ve learned that it’s usually better to have good insurance than to have a good lawyer (although it’s better to have both because you might need a lawyer to fight your insurance company). Anyway, today’s topic is all about insurance, specifically vehicle rental reimbursement insurance.

This insurance will cover (in whole or in part) the cost of using a rental vehicle if your regular vehicle is out of service due to an accident or Mother Nature’s crisis. If under your automobile policy you have collision coverage (accidents) and comprehensive coverage (hail, flood, theft, asteroid strike, etc.), you can add rent reimbursement insurance to your policy. Since this coverage is optional, if you have a spare vehicle, you may decide you don’t need it. If not, it can be useful, and as it is, it’s relatively inexpensive.

RAs with all auto insurance products, rMoney-back insurance comes with limitations and exclusions, which vary by company. Some companies limit coverage to a certain amount each day and a limit on the total amount the company will pay — say, $30/day with a maximum of $900. Other companies will agree to pay a rate they have negotiated with the rental company for the time “reasonably necessary” to repair your vehicle. Due to parts and labor shortages, the duration of coverage may be significant. If, for example, a repair to your vehicle requires a wiring harness from Ukraine or a currently out-of-stock microchip, your vehicle could be out of service for well over 30 days.

The length of coverage will also change if your insurance company decides your vehicle is destroyed (or stolen) and makes you a good faith settlement offer. There, you may find that your rental refund coverage ends seven days after you receive the offer.

For some insurance companies, what you pay as a premium for rental reimbursement insurance will depend on the type of rental vehicle you choose to receive if you make a claim. For these businesses, you can choose a basic econobox or, for a higher premium, something more substantial. You make this choice when you select coverage, not when you make a claim.

Also be aware that if your vehicle is damaged in an accident caused by another driver, you can file a claim with that driver’s insurance company for the cost of a rental vehicle. This works well if the other driver admits fault. However, if the fault is a matter of dispute (which is not uncommon), you are probably better off filing a claim with your own insurance company. Your insurance company can then decide if it is worth filing a complaint against the other driver’s insurance company.

There is no deductible linked to the rent reimbursement insurance. But if your coverage limits are less than your cost of renting a replacement vehicle for the time you need it, that extra expense is your obligation and acts as a deductible.

Rent reimbursement insurance does not apply to repairs following a mechanical breakdown. There, you’ll have to pay out of pocket unless a manufacturer’s warranty or extended service agreement includes rental reimbursement as a benefit. (or the repair center will provide you with a lender).

In short, before subscribing to rent reimbursement insurance, find out from your insurance company how their product works. As with most legal things, the devil is in the details.Jim Flynn is with the Colorado Springs company of Flynn & Wright LLC. You can contact him at [email protected]