Rental Reimbursement
A specific type of auto insurance coverage that reimburses policyholders for rental car expenses when their vehicle is unusable due to a covered loss. The coverage typically has daily and total claim limits, and reimburses actual rental costs up to those limits.
Example
“When Tom's pickup truck was stolen, his rental reimbursement coverage provided $40 per day for 30 days while the insurance company investigated the claim and he searched for a replacement vehicle.”
Memory Tip
Remember 'Reimburse = Refill purse' - the insurance company refills your purse (wallet) for money spent on rental cars.
Why It Matters
Rental reimbursement prevents financial hardship when your primary vehicle is unexpectedly unavailable, allowing you to maintain work attendance and family obligations. The relatively low cost of this coverage can save hundreds or thousands in rental expenses during lengthy repair periods.
Common Misconception
People often think rental reimbursement covers luxury vehicles or has no limits, but policies typically specify daily maximums (like $30-50 per day) and total claim limits. The coverage also doesn't apply to mechanical breakdowns unless you have specific mechanical breakdown coverage.
In Practice
Lisa's car required $6,800 in repairs after hitting a deer, taking 18 days to complete. Her rental reimbursement coverage provided $35 per day up to $1,050 maximum. She rented a mid-size car for $42 daily, totaling $756. Her insurance reimbursed her $630 ($35 × 18 days), and she paid the remaining $126 out of pocket, still saving significantly compared to having no coverage.
Etymology
Derived from 'reimburse,' which comes from the Latin 'in' (into) and 'bursa' (purse), literally meaning to put money back into one's purse.
Common Misspellings
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Related Terms
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