The Increase in Rental Car Rates and How This Impacts Your Insurance
ASHLEY URBAN
If you or anyone you know has traveled lately, you’ve heard the mumblings and grumblings about the sky-high rental car prices or just the complete lack of rental cars in general. Three years ago, you could find rental car options as low as $30/day. Now you’re lucky to find a compact or economy car option available for $60/day. And most family-friendly cars are running around $100+ per day.
So what happened?? In 2020, the rental car industry took a huge hit when the pandemic halted the majority of all travel. This lack of travel pushed many car rental companies into survival mode, so they sold large portions of their fleets off. Now that the country is opening back up, people are making up for lost time and are booking trips left and right. This sudden boom in travel has directly affected the demand for rental vehicles. However, most rental companies still have low inventories. This is a classic case of supply and demand. The number of vehicles companies have to rent out cannot match the demand. And the car rental companies that survived lockdown are trying to make up for lost revenues by increasing their prices.
How does this impact your insurance? Many people add “rental reimbursement” coverage to their auto policies. This additional coverage pays a set amount per day, typically up to a month, for a rental vehicle in the event of a covered loss. Over the past 3-5 years, the average amount of coverage most people signed up for was $30-40/day. While this amount is still helpful, it falls considerably short of what it would actually cost to rent a vehicle while yours is in the shop. And to add fuel to the fire, the length of repair times have increased due to the low availability of auto parts. So, now, not only could you be paying more per day, but you will likely be paying for a longer duration of time as well.
The good news is this is an easy and fairly inexpensive change to your policy. If you end up needing a rental car while yours is in the shop, you should contact your agent and discuss your options. If this is a coverage you already carry, you may want to review your limits, look at the cost of a rental in your area for a similar vehicle, and make adjustments as needed.
For more questions and insight into this, please always feel free to reach out to us at 785-370-0722!
