If you have car insurance, then it’s important to know exactly what it does and doesn’t cover. One question people often have is, “Am I covered by my policy for a rental car?” In other words, if they get into an accident and their car is damaged, will their insurance provider pay for them to rent a car until it’s fixed? This is the question we’re tackling today, so let’s get started!
Rental car reimbursement coverage explained
Rental car reimbursement is a type of optional coverage that policyholders in Canada can choose to add to their auto insurance policies. By adding this extra protection to your policy, your insurance company may pay for the cost of renting a car if your vehicle breaks down or needs to be repaired following an accident (you can find a list of common car accidents here). It is worth noting that policyholders will only be covered by the rental car reimbursement portion of their policy if they submit a claim that is approved.
Rental car reimbursement coverage is typically offered as an endorsement or rider and may only be available to drivers who also purchase comprehensive and/or collision coverage, as in some cases, rental car reimbursement can only be claimed under the comprehensive and collision portions of one’s policy. Note that comprehensive coverage, also known as parked car insurance, protects policyholders and their vehicles against a variety of non-collision-related damages, like damage caused by a fire or falling objects. Comprehensive coverage offers protection against all perils listed in your policy, which may also include theft, vandalism, wind, water damage, and more.
If your vehicle is lost or damaged due to any of these listed perils, the insurance company will help pay to repair or replace your vehicle. Meanwhile, collision coverage is one of the most popular types of optional auto insurance coverage in Canada. It compensates policyholders for vehicle repairs if their car is damaged following an accident with another vehicle, animal, or grounded object, regardless of who caused the accident.
Therefore, not only do comprehensive and collision coverages offer many benefits but they may be necessary if a policyholder also wants to enjoy the benefits of rental car reimbursement coverage. Please note that rental car reimbursement coverage only covers your own personal car. It will not cover you if you accidentally damage someone else’s vehicle or a rental car. So the answer to the question, Do you need rental car insurance? is in most cases still yes.
Filing a rental car reimbursement claim and renting a car
As mentioned above, if you need to file a rental car reimbursement claim, such as if your vehicle broke down or was damaged in a collision, you may have to do so under the comprehensive or collision coverage section of your policy. Regardless, the process is fairly similar:
Contact your insurance company to submit the claim
First, you will need to get in touch with your insurance provider, explain what happened to them, and ask for further instructions on how to file a claim. Now is also the time to find out if it’s best to file your rental car reimbursement claim under the comprehensive or collision coverage section of your policy. Once you have an answer to this, the insurance company will provide you with detailed instructions on what forms to fill out and what information to supply in order to successfully submit your claim. Nowadays, many insurance companies allow policyholders to file claims online, as well as over the phone and in person.
Check your rental car reimbursement coverage limit
Nearly all types of insurance coverage have limits. With rental car reimbursement coverage, it is especially important to double-check your limit as this will determine how much money you can spend on alternative transportation, such as a rental car. Typically, rental car reimbursement policies either cover policyholders up to a specific amount each day or a total amount, however there are companies that will cover you for a certain amount of days also, rather than a dollar amount.
Rent a car
Once you know your coverage limit, it’s time to shop around for rental cars. Many insurance companies have partnerships with rental car agencies. In some cases, choosing a rental car company that has partnered with your insurer might mean that the insurance company will pay the agency directly for the rental car costs. If this isn’t the case or you choose to go with a different rental car agency, you should be prepared to pay out of pocket up front and be reimbursed down the line.
Get confirmation from the rental car agency
Finally, make sure that you confirm all the details, big and small, before finalizing your rental. Important details include the cost, the return date, as well as who pays and when payment is due. Generally speaking, rental car reimbursement coverage only covers the policyholders until the day their vehicle is repaired and no longer.
When does car insurance not cover a rental car?
Your Toronto car insurance plan may not cover the cost of renting a car in certain scenarios. The first and most obvious scenario is if you do not have rental car reimbursement coverage on your policy. If this type of protection is not currently part of your policy, then you should not expect your insurance provider to pay for the cost of your rental car, no matter how long your car is in the repair shop. Beyond this obvious circumstance, there are a few other situations in which you should not expect to receive a rental car reimbursement payout.
Your policy has two vehicles listed on it, but rental car reimbursement only covers the one that wasn’t damaged.
Rental car reimbursement coverage follows the vehicle, not the policyholder. In other words, you will need to purchase it for each and every vehicle you insure. Even if you have the same auto insurance plan for two vehicles in your household, you will still need to buy rental car reimbursement coverage for each vehicle. It cannot be transferred between vehicles, so if the one that was damaged in an accident wasn’t the one that you had bought rental car reimbursement coverage for, your insurance provider will not reimburse you for these costs.
You want to rent a car while travelling
As mentioned above, rental car insurance and rental car reimbursement coverage are not the same. The latter only covers you if your personal vehicle needs to be repaired. It will not pay for you to rent a car while on vacation, whether for business or pleasure. The cost of renting a car in this scenario would be entirely on you.
Your car suffers a mechanical breakdown
Rental car reimbursement coverage does not cover vehicles that break down due to a mechanical issue. Rather, this type of optional coverage only protects cars that break down due to an insured loss. Depending on whether the rental car reimbursement coverage is part of your comprehensive or collision insurance, the insured losses you're covered for may include theft, vandalism, fire, falling objects, wind, water, car accidents, and collisions with animals.
Your car is in the shop for its annual maintenance check
Rental car reimbursement coverage will not pay for you to rent a car while your vehicle is in the shop for basic maintenance. It only covers you if your car breaks down or gets damaged in a collision.
Rental car reimbursement coverage for other modes of transportation
Ultimately, what your rental car reimbursement insurance covers depends on the terms and conditions of your policy. However, some rental car reimbursement plans will cover the policyholder for a wide range of alternative transportation. For example, if they prefer to take public transportation, like the bus or subway, while their vehicle is being repaired, they can be reimbursed for the cost of a transit pass. Alternatively, if they want to hire taxis or use ride-share services like Uber or Lyft, the insurance provider might compensate them for such expenses until their vehicle is repaired.
The restrictions of rental car reimbursement coverage
Every type of coverage has its limits, and that includes rental car reimbursement coverage. Read through the terms and conditions of your policy carefully to find out what these limits are. Generally speaking, these types of policies have a maximum amount of time that a car can be rented, as well as a maximum amount of money that can be spent on a rental car. After reaching the maximum time or cost, you will need to forfeit the rental car or pay for it out of pocket until your personal vehicle is repaired.
Contact BrokerLink to learn more about rental car reimbursement coverage
If you want to learn more about how rental car reimbursement coverage works in Canada or how you can add it to your policy, contact BrokerLink today. One of our licensed auto insurance specialists would be pleased to explain rental car reimbursement coverage in further detail, as well as provide you with a free quote to give you an idea of how much it would cost to add to your existing car insurance policy. We can also answer questions, like: Does insurance cover towing? or What to do if you are in a car accident? Get started today by getting in touch with BrokerLink by phone, email, or in person at one of our 200+ branches across Canada.
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FAQs on rental car reimbursement coverage
How much does rental car reimbursement coverage cost?
Rental car insurance costs vary and ultimately depend on your provider, your risk level, and the coverage already included in your policy. Typically, it is relatively inexpensive to add to your policy, though if you also need to add comprehensive and/or collision coverage, it might be more expensive.
Which insurance company offers the best rental car reimbursement coverage?
There is no one insurance company that offers the best rental car reimbursement policy. Since insurance is so personalized, you will need to consider your budget, goals, and current coverage to decide which insurer has the best coverage for you.
Are rental car insurance and rental car reimbursement the same?
No, rental car insurance and rental car reimbursement coverage are completely different, despite the similar sounding name. Where rental car insurance offers protection against damages to those who rent cars, such as while they are on vacation, rental car reimbursement pays for the cost of renting a car if your personal vehicle is damaged and needs to be repaired.
Can I claim rental car reimbursement if I am not at fault in a car accident?
If you have any questions, contact one of our local branches.
