Let’s talk about rental car coverage also known as transportation expense. 

This is a coverage that typically you find on your personal automobile policy, and it covers the cost for you to have access to a rental car while your vehicle is in the shop being repaired. 

What we’re finding is that a lot of clients are running out of their limit of coverage for a rental car prior to their vehicle being repaired. Since we are starting to see this trend more frequently, we wanted to explain why we’re seeing this shift and what you can do to avoid ending up in a situation like that. 

Let’s start first with the repair shops…

Repair Shops are Experiencing Significant Delays

Any repair shop you call today they are going to have a bit of a delay before they can even get you in for repairs and once repairs begin, you can expect the repair process to last longer than it has in years past. 

The industry is experiencing supply chain issues and labor shortages. Two to three years ago if you had a fender bender, that repair may have taken 14 days, including dropping your car off at the shop, getting the car repaired, and getting it returned to you. Now you can expect that same repair to take twice as long. 

So, you could anticipate 30 days now. Your policy has a set limit for rental car coverage and if you defaulted to the minimum, that could be approximately $600 or $750. Take $600 as an example, if the rental car rate with fees and everything comes out to $60 a day, that’s 10 days of coverage.

After those 10 days, you’ve exhausted your limit. Once the coverage is exhausted you must turn your rental car in or begin to pay out of pocket.  This is leaving a lot of consumers, our insureds, very frustrated. 

We are asking and encouraging clients to consider carrying higher rental car limits. Whatever is on your policy today is often not the only limit that’s available to you. You can give us a call and we can go through your policy with you. 

Ideally, we would like to see our customers carrying a minimum of $1,500, and we do have options where some carriers will offer even higher limits. 

The Cost to Rent a Car Has Increased

Not only are the repair shops experiencing issues with sourcing parts and getting the parts that they need to repair your car, which is therefore delaying and making it take longer to get your car repaired and back to you, but another issue that we’re experiencing is the cost to rent a car is much more expensive today than it was 2-3 years ago. 

I recently read a statistic that in 2021, the average daily rate for a rental car was up by $35 a day. Here we are six months into 2022 with no end in sight. Part of the cause and reason for that is during the height of Covid there was less of a need or demand for rental cars. A lot of rental car companies sold off part of their fleet. Now we’re back to traveling, and needing and renting rental cars, but these fleets have not been increased to their pre-Covid sizes.

As you can see there are multiple factors impacting the auto repair shops and rental car industry and this translates into your claims experience with us as well. 

Please know, it’s not us, and it’s not your insurance company. 

We’re all feeling these changes in some capacity. At the end of the day, we are experiencing supply chain issues, increased costs in labor and materials, labor shortages, increased costs to rent a car, and increased cost to replace a car. Then on top of that, we have brand new vehicles that have very sophisticated technology that take a lot longer to repair. 

The good news is increasing your rental car coverage limit does not substantially increase your premium. Give us a call, shoot us an email, send a request through our client portal. 

We would love to have that discussion and make sure that you’re adequately covered should your vehicle land up in the shop for repairs following a covered claim. 804-320-0129 or www.knightmageeinsurance.com

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