If you don’t have rental car reimbursement coverage on your auto policy, now may be the time to consider adding it.
Current supply-chain issues and labor shortages are slowing parts shipments, limiting repair shop capacity and raising rental car prices. After an accident, many drivers are now paying more out of pocket than they’d expect to rent a vehicle as they wait longer for their damaged cars to be repaired.
How supply chain issues can cost drivers after an accident
Auto body and mechanical work that once took days can now drag on for weeks, with half-fixed cars sitting in the shop as they await delayed parts shipments or the availability of stretched-thin technicians to work on them.
That can leave car-less drivers facing increased competition for a smaller pool of available rental cars. Not only do they need the rentals longer, but rental car inventory is very low, with rental agencies having sold off much of their fleet during the pandemic. Scarcity has pushed the price of car rentals up 29% compared to one year ago (January 2021 versus January 2022, according to the U.S. Department of Labor).
Depending on the circumstances of their accident and the type of coverage they’ve selected on their auto policies, drivers may need to pay those higher rental costs out of pocket.
How rental coverage works after an accident
When an insured driver hits your car and is deemed responsible for the accident, their insurance typically pays the cost for your rental car while yours is being fixed. If you’ve filed a claim under your PEMCO uninsured/underinsured motorist coverage, its ability to pay for a rental car varies by state according to the terms of your policy.
Otherwise, like virtually all auto insurance policies sold in the United States, PEMCO provides rental car reimbursement as an optional add-on (not automatic) coverage. That’s because not everyone needs or wants it, particularly if they have another car they can use while theirs is in the shop.
Rental car reimbursement coverage pays the cost you incur for a rental car, up to the limits you select, while your car isn’t drivable or is being repaired after a covered loss. If we declare the car a total loss and make an offer to settle the claim, PEMCO will pay the cost of an additional five days of rental car use.
Three rental car reimbursement options are available for purchase: $30/day up to a total of $900 per occurrence; $50/day for up to $1,500 and $70/day up to $2,100. The annual cost is roughly $26, $44 and $59 respectively. Depending on the kind of vehicle you need and the limits you select, the coverage may not be enough to pay the entire rental bill under current rental market conditions. However, it usually can provide enough of a cushion to make a rental car fit into your budget.
You’re eligible to purchase rental car reimbursement coverage as long as you’ve chosen collision and comprehensive coverage for your car. Essentially, that’s coverage to fix your car if you’re responsible for an accident, it’s stolen or vandalized or if it’s damaged by something else, like a tree falling or a deer jumping out in front of you. (Sometimes, drivers of older, lower valued cars drop those coverages. Learn more here about auto insurance coverages and what they mean.)
If you’re not sure if you’ve selected rental car reimbursement or whether you have collision or comprehensive coverage, check your latest policy renewal or log in to your pemco.com account.
Could now be the time to add rental reimbursement coverage?
Maybe. The answer depends on whether you have collision and comprehensive coverages for your car, how easily you can make other transportation arrangements and whether your personal emergency fund could cover the expense of a rental car for an extended time.
To learn more, including pricing options, contact your local PEMCO agent or call 1-800-GO-PEMCO.
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