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Understanding Your NY Auto Insurance Policy’s Rental Car Coverage

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WHEN YOUR car gets damaged in an accident or stolen, the repair or recovery cost is only part of the story.

Without another vehicle available, your only recourse may be to rent one. The good news is that your policy may already include coverage to defray the cost of a rental unless you chose to get the cheapest car insurance in NY option.

The standard personal auto policy includes a coverage called “transportation expenses.” If you have purchased collision coverage on your car and that car is damaged in a collision, this coverage will pay for “temporary transportation expenses.”

The same applies if you have purchased comprehensive coverage. If the car is damaged by something other than a collision, the policy will cover these expenses. Typical rental reimbursement endorsements cover between $20 and $60 per day for a rental up to 30 days in duration. This coverage applies to a vehicle to which you do not ordinarily have access, such as a friend’s car or a rental.

Time limitations apply. If your owned or borrowed car is stolen, coverage begins 48 hours after the theft and ends when you are able to use the vehicle again or when the insurance company pays you for the loss.

If the cause of loss is something other than theft, the insurance pays the expenses incurred more than 24 hours after you lose use of the vehicle. Finally, the insurance stops paying at the end of the period of time reasonably required to repair or replace the vehicle.

How it works

  • John has both comprehensive and collision coverages on his sedan. A frayed wire in the engine catches fire, resulting in major damage to the car. The car is in the shop for 15 days, so he rents a replacement for $35 per day. His insurance will pay up to $40 per day so he has no out of pocket expense for the rental.
  • Sue walks out of a store to find an empty space where her car should have been. She reports the theft to the police and her insurance company. The insurer will pay $20 per day, starting 48 hours after she discovered the car missing.
  • Dexter has no collision coverage on his car. A month later, a bee stings him while he’s driving and he plows into a highway sign. The insurer will not cover his rental costs because he had not purchased collision coverage.

NOTE: Not all auto insurance policies are the same. Some may pay $20 per day for rental costs, or up to $100 per day. Others may use a percentage of cost reimbursement where the insurance company pays 80% of the rental and the insured pays 20% out of pocket. Check with us to find out what coverage you have.

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