One Gets You a Rental Car. The Other Can Pay for Ubers and Lost Income.
The Critical Difference Between a Personal and Commercial Policy.
Rental Reimbursement is the common coverage on a personal auto policy. If your car is in the shop after an accident, it pays for you to get a rental car. Loss of Use is a much broader coverage found on commercial or RV policies. It doesn’t just pay for a rental; it can reimburse a business for the income it loses while a commercial vehicle is out of service, or it can pay for a hotel and other transportation costs if your full-time RV is wrecked. One is a simple substitute; the other is a broader economic replacement.
Rental Reimbursement: The $5/Month Rider That Saves You From a $50/Day Rental Bill.
The Best, Cheapest Add-On to Your Auto Policy.
I was always too cheap to add “Rental Reimbursement” to my auto policy. It was an extra $5 a month. Then, I was in an accident, and my car was in the shop for two weeks. I had to pay over $700 out-of-pocket for a rental car just to get to work. It was a painful lesson. I immediately added the rider. For a tiny, almost unnoticeable cost, I now have the peace of mind of knowing that a major headache and expense will be completely taken care of after an accident.
“Loss of Use”: The Commercial Coverage That Pays You for a Truck Being Out of Service.
My Truck is My Paycheck. This Insures It.
As an owner-operator of a dump truck, if my truck is in the shop, my income stops. That’s why I have “Loss of Use” coverage on my commercial auto policy. When a major breakdown put my truck out of commission for three weeks, this coverage paid me for the lost revenue I would have earned during that time. It was a lifeline that allowed me to keep my business afloat. For any business that relies on a vehicle, this is an absolutely essential coverage.
Is Rental Reimbursement Worth It? A Mathematical Breakdown.
For Most People, It’s a No-Brainer.
Let’s do the math. The average cost of a rental car is about $45 per day. A typical repair after an accident can easily take 10 days. That’s a $450 bill you’d have to pay out-of-pocket. The annual cost of a good Rental Reimbursement rider is often only about
50−50−
60. This means that if you have just one single claim every eight years, the coverage has more than paid for itself. For the low cost and the high potential benefit, it is almost always a smart financial decision.
The Daily Limits ($30, $50, etc.) on Your Rental Coverage and Why They Matter.
Make Sure Your Limit Can Actually Rent a Car.
It’s important to look at the details of your Rental Reimbursement coverage. It will have a daily limit (e.g., “
30perday")andatotallimit(e.g.,"30perday")andatotallimit(e.g.,"
900 total”). In today’s market, a $30/day limit is not going to be enough to rent a comparable vehicle, especially if you need an SUV or a truck. It is well worth the extra dollar or two a month to upgrade your coverage to a $50 or $60 per day limit to ensure your benefit is actually useful when you need it.
For Most People, It’s Called Rental Reimbursement. For Businesses, It’s Loss of Use.
The Simple Way to Distinguish the Two.
While the concepts are similar, the terminology is distinct. If you have a personal auto policy for your family car, the coverage that pays for a temporary replacement vehicle is called Rental Reimbursement. If you have a commercial auto policy for a business vehicle, the broader coverage that can reimburse you for lost income or a rental is called Loss of Use or “Rental with Downtime.”
The Horror Story of a Month-Long Repair Bill Without This Coverage.
I Was Trapped. No Car, and a Growing Rental Bill.
After a major accident, my car needed extensive repairs. The body shop had to wait for back-ordered parts, and the repair dragged on for over a month. I didn’t have Rental Reimbursement coverage. I had to pay over $1,500 for a rental car just to be able to live my life and get to work. That massive, unexpected bill, on top of the stress of the accident, was a financial nightmare. It’s a mistake I will never, ever make again.
How “Loss of Use” Can Be a Lifesaver for a Full-Time RVer Whose Rig is in the Shop.
Our “Home” Was Wrecked. Our Policy Paid for a Hotel.
My wife and I are full-time RVers. Our motorhome is our only home. When we were in an accident, our rig was in the shop for three weeks. Our specialized full-timer’s RV policy had “Loss of Use” coverage. It was a lifesaver. It paid for us to stay in a hotel and for a rental car so we could still get around. It provided the “substitute housing” we needed, a benefit that a standard Rental Reimbursement rider would never cover.
Don’t Assume Your Policy Will Pay for a Rental. It’s an Optional Add-On.
The Most Common, Wrong Assumption After an Accident.
So many people get into an accident and are shocked to learn that their insurance policy will not pay for a rental car. They just assume it’s included. It is not. Rental Reimbursement is an optional coverage that you must specifically choose to add to your policy. It is one of the most common and frustrating coverage gaps that people discover only after it’s too late. Check your policy declarations page right now to see if you have it.
The Simple Rider That Eliminates a Huge Headache After an Accident.
The Definition of a “Peace of Mind” Coverage.
An auto accident is already a massive headache. There are police reports, claims adjusters, and body shops to deal with. The last thing you want to add to that stress is the daily, nagging worry about the mounting cost of a rental car. For a few dollars a month, Rental Reimbursement coverage completely eliminates that headache. It is the definition of a “peace of mind” rider, a small, smart purchase that makes a difficult time just a little bit easier.