The Truth About Rental Reimbursement Coverage

If you look at the bottom of your auto policy “declarations page”, the last coverage listed is normally “Rental Reimbursement” (also known as “Transportation Expense” coverage).  Many people think this coverage is necessary in order for coverage to apply to a car that they rent for vacation.  This is not the case.  Rental Reimbursement coverage is used to cover the cost of renting a car after you have made a claim on your insurance and while your car is being repaired.  To figure out if you need to pay for this coverage on your policy, consider whether or not your household would run the same with one less car for a month.  If your answer is YES, you may want to consider dropping this coverage. 

An example of a scenario that would probably need RR coverage is a married couple with two cars.  If both of them rely on one of the cars to get to work, then they should have RR on their policy.  If this same couple buys a third car, they can probably drop RR coverage.  Many retired couples with two cars can drop RR if they’d be able to continue living normally with one car for a few weeks.  Some other things to consider:

  • In the 3-car/2-driver example, one of those cars may be a mini-van which may be crucial for a household with children to run smoothly while the other two cars (sedans) can be lived without.  In this case, you can leave RR coverage on the van and drop from the two other cars.
  • If you drive a high-end luxury car (BMW, Mercedes, etc..) and are in an accident, you may not get the exact same car as a rental.  Similar body style, yes.  But it may be a Ford Escape instead of a BMW X5.  Some companies do offer a higher coverage limit at a much higher cost if you would absolutely need the same type of rental car.
  • RR coverage is not applicable if your car is in the shop for maintenance/warranty work. 

As always, check with your insurance company for specific information on your policy.  To reach me, call 571-969-3743 or visit