Does your business rely on the use of one or more commercial autos? If one of your vehicles is damaged in an accident, will you need to rent a vehicle to keep your business going while the damaged auto is being repaired? If the answer is yes, you might consider purchasing rental reimbursement coverage.

Rental reimbursement coverage, as its name suggests, provides reimbursement for the cost of renting an auto due to a loss to a covered auto.

This coverage applies in addition to any other coverage, such as comprehensive or collision, which you have for the covered auto.

Rental Reimbursement Versus Transportation Expenses

It is important to understand the difference between rental reimbursement coverage and transportation expense coverage. The latter is automatically included in a commercial auto policy if you have purchased comprehensive or specified causes of loss coverage. It is usually provided as a coverage extension under physical damage coverage.

Under transportation expense coverage, your insurer will pay up to $20 per day for temporary transportation expense you incur because of the theft of a covered private passenger type auto. This coverage applies only if a private passenger vehicle has been stolen. It does not apply to the theft of a truck or other commercial auto. The entire vehicle must be stolen. No coverage applies to the theft of tires, batteries or other parts of vehicles.

Your insurer will reimburse you at a rate of $20 per day for a maximum of 30 days.

It will not pay more than $600 for all costs. Transportation expenses include rental fees for renting a replacement vehicle, the cost of bus fare, train fare or any other type of transportation expense you incur due to the theft of your auto. Because many stolen vehicles are recovered quickly, transportation expense coverage begins 48 hours after the theft. Coverage ends when the vehicle is returned to use or when the insurer pays for its loss.

Rental Reimbursement Coverage

Rental reimbursement coverage can be added to a commercial auto policy by an endorsement.
It is available for private passenger or commercial vehicles that are insured under comprehensive or specified causes of loss coverage. You can choose to cover specific vehicles or an entire class of autos (such as all owned commercial vehicles). The vehicles you have elected to cover must be described in the endorsement.

Rental reimbursement coverage provides a specified dollar amount (such as $25) per day. The per day amount applies for a specified number of days, such as 30 days. It is important to consider the cost of renting vehicles in your area. For example, you might be able to rent a car at a bargain rental agency for $25 a day. However, a truck rental may cost much more. If you are purchasing rental reimbursement coverage for commercial vehicles, be sure to request a daily reimbursement rate that will cover most, if not all, of your costs.

Rental reimbursement applies when a covered auto has suffered a loss, meaning damage, destruction or theft. Coverage begins 24 hours after the loss (there is a one-day waiting period). Coverage ends after the number of days it takes to repair or replace the vehicle. For instance, suppose that a truck is damaged in an accident and is repaired eight days later. Your coverage will end on the eighth day, when the repairs are completed. If your vehicle is stolen, the coverage period includes the time it takes to locate the vehicle and return it to you. For instance, suppose a vehicle is stolen and recovered two days later. The vehicle is damaged and requires repairs. Repairs take 5 days. Your coverage period will begin on day two (due to the waiting period) and end of day seven.

No coverage applies under the endorsement if a spare or reserve auto is available to you. For example, suppose a pickup truck that you use for your construction business has been stolen. If you have another pickup truck sitting in your parking lot that you can use until your other truck is recovered, your insurer will not reimburse you for the cost to rent a truck.

Finally, if a private passenger auto is stolen, your rental reimbursement coverage will apply as excess coverage over your transportation expense coverage. For example, suppose that your rental reimbursement coverage limit is $40 per day. You spend $40 per day for 15 days to rent a private passenger auto. Transportation expense coverage will pay the first $20 per day for 13 days (15 days minus the 2-day waiting period). Rental reimbursement coverage will pay the remaining $20 per day for 13 days plus $40 for one day (since rental reimbursement has a one-day waiting period).