How Full Is My ‘Full Coverage’ Auto Insurance Policy? (Part 3)


Car being towed by a flatbed truckIn the first two parts of this series talked about instances where your “full coverage” auto insurance policy might not cover your own car’s damages. Part one covered the possibility of having your vehicle totaled and not getting enough insurance claim money to pay off the loan balance. In part two we talked about car customizations and insuring them if they are stolen, damaged, or destroyed.

In this article we’ll talk about a couple of additional expenses that you may run into if your vehicle is damaged beyond repair or stolen and never found, like the cost of a rental car to get you around while you and your insurer sort out the mess.

Rental Reimbursement Coverage

The last thing you want to think about when your car’s declared a total loss is finding a way to go on with everyday tasks like getting to and from work, getting the kids to school, or going grocery shopping. The good news is that there’s rental reimursement coverage available that will help make sure you have a way of continuing with everyday life while you deal with your total-loss claim.

Rental reimbursement coverage will pay for the cost of a rental car for you to use (up to a certain per-day limit) while you settle up with your insurer or while your car’s in the shop for repairs covered by your policy.

“Full coverage” auto insurance policies that come with only liability, collision, and comprehensive coverage will most likely not provide compensation for a rental vehicle. Far too many vehicle owners buy insurance policies without including the optional rental car coverage. Policyholders usually opt out of purchasing this option because they think it’ll raise their rates too much, but for the most part, the additional premium is pretty insignificant.

Costs and Benefits of Rental Reimbursement Coverage

In a sample insurance policy we looked at issued by State Farm, the cost for car rental and travel expenses coverages — the two are purchased together — were $2.80 per month, which covered up to $600 in rental car costs. That’s just $16.80 every six months, or $33.60 a year.

So, if you’ve suffered a total loss, you can potentially save yourself from having to pay to rent a car, which would be one less headache you’d have to deal with. Rental coverages typically come with a set amount allowed toward renting cars; $25/day or $600 total is the limit of the State Farm policy used in this example.

According to a guide from the Oklahoma Department of Insurance, the general price range for rental reimbursement coverage in that state is between $5 and $46 for $30/day worth of coverage.

Keep in mind that the benefits of rental car coverage don’t only kick in after a total loss but could also help you out in a few other situations. If you have to file a comprehensive or collision insurance claim because of damage to your vehicle caused by an accident or vandalism, your vehicle could be in a repair shop for a little while, so this could definitely help you out.

Towing Reimbursement Coverage

Another optional coverage you may want to add to your insurance policy would be towing reimbursement. Chances are that if you’ve been in an accident where you car’s totaled, you won’t be able to drive it and will need it towed, and this add-on will help you with that. This option is often called “towing and labor coverage” or “emergency roadside service” and will pay for the cost to tow your car to a repair facility.

In addition to towing, these coverages often include additional services such as roadside assistance. This may include lockout services in case you lock your keys in your car, or need help changing a flat tire or getting a jump start on your dead battery.

The towing reimbursement add-ons also have set limits, and you may only be covered for towing your car a certain number of miles or for a certain dollar amount. If you get in a wreck during a cross-country trip, your insurer probably won’t pay to have your vehicle towed back across the country.

Towing and labor coverage, emergency road service, or whatever a carrier may call it is typically not included in a “full coverage” policy but is usually pretty cheap. Geico advertises this option for as little as $14 a year, which comes out to a little over a $1 a month. The peace of mind of knowing that you won’t be stuck on the side of the road should be worth the investment.

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