Your Clients Might Not Have Enough Rental Reimbursement Coverage
Persistent supply chain problems are creating shortages of some auto parts, and that could mean some of your clients will be underinsured when they have to rent cars to subsitute for one that’s been damaged.
A recent article on TheDrive.com described the problems in vivid detail:
Back in early December, Ed Kim was involved in a minor fender bender. He took it straight to the body shop recommended by his insurance company, and the mechanic told Kim that they have such a backlog that they couldn’t even look at his car for a month and a half. Luckily, the damage was minor, and the car was still drivable. As it turned out, Kim’s car needed just a few trim pieces that, under normal circumstances, would have arrived three or four days later. A month later while Kim’s car sat idle at the garage, the parts finally made it. …
Clay Homann, a 26-year veteran of the parts business, is a manager at Austin’s Automotive Specialists, which is a family-owned auto repair center with 10 stores across Austin, Texas. He says this situation is the worst he’s ever seen, and the most troubling aspect is that there’s no real ETA for when the parts will be available.
“I literally had a Ford F-150 sitting here for four months waiting for a part,” Homann told me on the phone. “People have to find rental cars, borrow rides, and beg, borrow and steal just to get around.”
These delays can spell trouble for vehicle owners who carry physical damage insurance coverage on their cars. The limits of insurance on their policies for Transportation Expenses Coverage (also known as “Rental Reimbursement” Coverage) may be inadequate to cover the length of a temporary rental while the insured vehicle is repaired.
The Insurance Services Office (ISO) Personal Auto Policy, PP 00 01 09 18, provides up to $30 per day and a maximum of $900 for temporary transportation expenses incurred by the named insured in the event of a loss to a covered vehicle. While all auto insurance policies vary somewhat from each other, non-ISO policies may come with similar amounts as the basic coverage. If the client’s truck is out of commission for four months because parts are unavailable, that may not be nearly enough to pay for the rental.
ISO’s Personal Vehicle Manual’s rules offers optional limits of $40/$1,200; $50/$1,500; and $75/$2,250. Individual carriers may offer even more than those amounts. Check with your preferred markets to see what they have available. As your personal auto clients’ policies come up for renewal, bumping up their Transportation Expenses Coverage limits might be worth discussing.
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