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Why is Rental Car Coverage Extra?

Sometimes Rental Car Reimbursement Coverage is confused with Coverage for Renting a Car. So lets clear this up first.

Rental Reimbursement Coverage will pay you back for the cost to rent a car (reimburse) if you car is involved in a covered collision or comprehensive loss or accident. . Rental Reimbursement coverage will pay up to a certain dollar amount per day, usually $30-$40, and only for a limited time, usually 30 days. It will not reimburse you if your car is in the shop for mechanical reasons however.

Coverage for Renting a Car will depend upon the Coverage you have on your current insurance policy. This is a questions you should ask you agent before you rent a car because there are a few dangerous loopholes in the rental car agreement. Learn about those here

Now I am not an Insurance Company CEO, so I don't make the rules, but here are a few reasons why I believe it is optional.

  • Many people simply don't need it. If you have an extra car in your driveway or garage, you could probably get by a few days while your car is in the body shop. If you have more than one car available if needed you might be able to get by without a rental car. It might take some juggling of schedules but it can be done. 
  • Today's insurance consumer is incredibly price conscious. Most want the lowest price possible when shopping for insurance, but then want the most coverage at the time of a claim. In an effort to have the lowest base price insurance companies make this coverage optional to attract more clients. 

If you only have 1 car I feel you really must have this coverage. You will still need to get to work or school, you will still need to get groceries and food. You won't realize how much you depend on your car until you can't drive it for a few days

It is a growing trend for some car insurance companies to advertise "accident forgiveness" in order to entice you to switch car insurance companies. There is a lot of fine print involved on those TV ads and the insurance companies never have enough time to tell you the real truth about accident forgiveness. Don't be fooled into thinking the insurance company is giving you this for free.

Many companies offer accident forgiveness even if they don't spend their part of the 6 Billion (yes that's right Billion!) dollars in insurance advertising telling your about it.

With many companies you have to qualify for it. Usually by being accident and claim free for a period of time. Usually between 3 and 5 years before they would "forgive" that first accident, State Farm makes you wait 9 years!. While other companies, like Allstate who advertise accident forgiveness will offer it for you on Day #1 for an additional cost.(something they fail to mention in their ads) In Illinois Allstate charges either 10 or 15% for Accident Forgiveness depending upon which plan you select. So basically they are selling you insurance on your insurance.

Here is a partial list of companies who offer accident forgiveness and how you qualify

  • Allstate- Part of an add on package that will raise your cost by 10 or 15%
  • Geico- An add on coverage or free after 3 years if you qualify
  • Farmers- Additional Cost
  • Nationwide- Additional Cost
  • State Farm- 1 accident forgiven after 9 years of save driving
  • Travelers- Part of an add on Package.

Accident Forgiveness does not mean that your rate will not change because of an accident. Sure, the accident surcharge is waived, so you won't get an increase because of a surcharge, but you could lose some of the safe driving club discount which, nevertheless, looks like an increase in premium. Accident forgiveness sounds like you won't get charged more if you get in an accident, but that is not always the case.

So a majority of companies do offer accident forgiveness of some type, but most don't advertise it. Ask your agent if your policy offers it and if you qualify for it.

Price Optimization sounds like a nice term doesn't it? It can be but not when it comes to insurance! In fact it is the Insurance Industry's Dirty Little Secret.


Many companies reward their most loyal clients with incentives, freebies and discounts. But in car insurance, the opposite can actually happen. Price optimization is a little known technique that penalizes loyal auto insurance customers by charging them higher rates because their insurer believes they are unlikely to shop around for a better price.

By mining data and testing incremental price increases, some insurers try to predict who is less likely to switch companies, and then charge those customers more in order to squeeze out higher profits. Something I like to call a loyalty tax.

Many Illinois drivers are being punished with higher premiums just for being loyal to their insurance company.

According to this Wall Street journal Article Allstate and other car insurance companies try to identify customers who are unlikely to switch companies or even shop their rates. Which turns out to be about 60% of all policy holders

Allstate initially denied it uses "any form of  price optimization", but in 2011 Allstate filed a report with the SEC saying that it does indeed use price optimization. As an Allstate agent for 12 years I can tell you that Allstate does in fact use price optimization in their rating. The longer you have been insured with them the more likely you are overpaying. 

Nine states so far have banned price optimization (Pennsylvania, California, Florida, Maine, Indiana, Maryland, Vermont, Washington and Ohio),  but it is alive and well in Illinois.

No insurance company will tell you if they are charging you more due to price optimization, the only way you can keep the insurance company honest is by shopping your rate every few years. Complacency can end up costing you big money.

This is why I feel it is best to use an independent insurance agent. They will have access to multiple companies and can shop your rate for you. Once you find an agent that is a good fit for you, you can keep the same relationship with your agent, but switch companies as needed.


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Rueck Insurance is your independent, one-stop insurance center for all your personal and business insurance needs in Illinois. Insurance shopping is easy when the Protection Team provides you with multiple quotes to choose from. You will always know you are getting the best coverage at the lowest possible price.

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Rueck Insurance is your independent, one-stop insurance center for all your personal and business insurance needs in Illinois.

702 Bloomington Rd#205
    Champaign, Illnois
(217) 355-9075

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