Insurance 101: Automobile Insurance - Rental Reimbursement & Towing

Two of the most confusing parts of the physical damage insurance on your automobile insurance policy are the references to rental reimbursement and towing reimbursement. Most people assume that the rental reimbursement and towing coverage work much like the towing coverage you would purchase from AAA or another road service provider, but this is not true.

It's important to remember that your automobile insurance policy only gives you rental reimbursement and towing coverage if you are in an accident. If your car breaks down due to mechanical failure or normal wear and tear you will need to seek an alternate source of funding. Your insurance policy will not pay.

Rental reimbursement coverage is a little tricky. Depending on the insurance company you have you might need to pay for the rental car up front and then submit for reimbursement. Other companies are nicer and allow the rental car company to bill your car insurance company directly, which is a wonderful perk. One less bill to deal with equals one less headache for you. Check with your insurance agent to determine what options you have for rental reimbursement. The standard rental reimbursement used to be up to $30 per day for up to 30 days. Unfortunately, $30 per day is not necessarily enough. This can vary depending upon the area of the country you live in or the type of vehicle you need to rent. Larger vehicles, such as vans or SUV's, can cost more. Oftentimes there is an increased limit available for a nominal cost.