Due to labor shortages and supply chain issues, the time it takes to repair a vehicle has increased substantially in the last year. What used to take two weeks maximum can now take more than a month, and that leaves some people in a bind with their insurance.
The standard auto insurance policy will in most cases pay for a rental car for up to 30 days after an accident, as long as the policyholder opted for car rental reimbursement. That standard has been considered enough time for the majority of repairs.
But as a result of longer wait times, some people are exceeding their 30-day rental car coverage and having to pay out of pocket during the excess time it takes fix their vehicle. Depending on what kind of car they are renting, the costs can run into the hundreds or even thousands of dollars.
A recent report by Enterprise Rent-a-Car found that collision repairs took nearly five days longer in the Spring of 2022 than they did in same period the year prior. Nationwide, it took an average of 17.7 days to repair a vehicle in the second quarter, compared to 13.2 days in the same three months of 2021. Wait time varied greatly between states.
John Yoswick, editor of the weekly CRASH Network newsletter, told Enterprise researchers, “More than 13% of shops are still scheduling more than eight weeks out, a percentage that, until this past winter, hadn’t exceeded 2%. Shops with three months of backlog are not uncommon.”
CCC Intelligent Solutions, a claims technology provider, in its own report published in July 2022, said that the more expensive the repairs, the longer the wait times.
According to CCC, the average wait time for repairs costing more than $10,000 was 37 days in 2021, compared to 30.3 days in 2020. Repairs costing less than $500 on average took 3.2 days in 2021, compared to 2.9 days the year prior.
What’s causing delays:
- Poor availability of original equipment manufacturer parts due to supply chain snarls and production interruptions around the world.
- Delays and backlogs in receiving parts.
- Shortage of skilled workers with body shop experience.
- Backlogs with many shops receiving more work than they can handle.
Insurance implications
As mentioned, if a driver takes out rental car coverage, the average policy will cover the costs for up to 30 days.
But some insurers have different rules. For example, a policy may have a daily and overall dollar limit per claim. The rental reimbursement rate could be, say, $35 per day/$1,050 per claim. Since there is a dollar limit per claim, if you know the car is going to take longer than 30 days to repair, you could opt for a less expensive rental car.
Remember too that rental reimbursement will only cover the cost of the rental, and not the security deposit, fuel and supplemental coverage you may choose to cover the rented vehicle.
You should also check with your insurance carrier whether you will pay for the rental up front and be reimbursed by the insurer, or if the rental company can bill the company directly.
Many insurers have relationships with car rental companies that can often arrange for direct billing.
One exception to the 30-day rule is if the accident was caused by another driver. In that case, the at-fault driver’s insurer would pay for the rental vehicle for a reasonable amount of time as the car is being repaired or replaced, which may exceed 30 days.
At the same time, it can take longer to get reimbursed as the other driver’s insurance company will need time to verify the claim before approving payments.
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