Due to labor shortages and supply chain issues, the time it takes to repair a vehicle has increased (a LOT!) in the last year. What used to take 2 weeks maximum can now take 1 – 2 months (or, more!) and that could leave you in a bind with your insurance company.
Standard auto insurance policies will, in most cases, pay for a rental car for up to 30 days after an accident, as long as you — the policyholder — opted for car rental reimbursement. That 30 day standard has long been considered enough time for the majority of repairs to be completed.
BUT… as a result of longer repair times, you could find yourself exceeding the 30-day rental car coverage and, if so, you might have to pay out of your own pocket to rent a replacement vehicle if it takes over 30 days to repair your vehicle. Depending on what kind of car you’re renting, these “excess” costs can run into the hundreds or even thousands of dollars. Ouch!
A recent report by Enterprise Rent-a-Car found 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 also varied greatly between states. But the trend has been steadily increasing the time it takes to repair a vehicle.
John Yoswick, editor of the weekly CRASH Network newsletter, told Enterprise researchers, “More than 13% of shops are scheduling more than eight weeks out, a percentage that, until this past winter, had not exceeded 2%. Today, repair shops with three months of backlog are not at all 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 these delays
There are a number of possible reasons. Among the more likely reasons are:
• Poor availability of OEM parts due to production problems caused by supply-chain issues globally
• Delays and backlogs in receiving finished parts due to supply-chain and national delivery issues
• Shortage of skilled workers with body shop experience — a lot of workers left when Covid-19 hit
• Backlogs with many shops receiving more work than they can handle — it’s supply and demand
Insurance implications: 30 Days (and rarely more!)
As mentioned above, if you take out rental car coverage, the policy will cover your costs for up to 30 days.
But some insurers have different rules. For example, a policy may have a daily AND maximum dollar limit per claim. The rental reimbursement rate could be, say, $35 per day with a maximum benefit of $1,050 per claim. Since there is a dollar limit per claim, if you know your car is going to take longer than 30 days to repair, you may want to choose a less expensive rental car to help you “stretch” your maximum benefit limit past 30 days.
Remember too that rental reimbursement will only cover the cost of the rental. The security deposit, fuel and supplemental coverages you may want to have on the rented vehicle are YOUR responsibilities.
You should also check with your insurance company about whether you will pay for the rental up front and be reimbursed by your insurance company, or if the rental company can bill your company directly.
And don’t forget — your insurer may, like many companies, have relationships with car rental companies (for example Enterprise, Hertz, Avis, etc.) that will often direct bill your insurance company. A nice convenience and one less hassle you need to address while your life is disrupted, and your vehicle is being repaired.
One exception to the 30-day rule is . . . IF . . . the accident was caused by another driver.
In this case, the “at-fault” driver’s insurance company will typically pay for a rental vehicle for a reasonable amount of time as the car is being repaired or replaced, which may (or, may not) exceed 30 days. If you have an accident and you’re not the “at fault” driver, DSD can verify what reimbursement options you may have.
At the same time, you’ll want to consider this: it can take (a LOT) longer to get reimbursed by the other driver’s insurance company as it will often need time to verify the claim before approving payments to you.
If you’re not sure what kind of coverage limits you have — or need to have in 2023 — talk with us. We’re here to help make sense of what you have and, ensure you have what you need based on your budget and ability to cover out-of-pocket costs yourself. Self-insuring smaller risks can save you premiums. At the same time, paying a premium for a policy coverage you really need can save you from incurring expenses you really don’t want to take on yourself. Call us . . . we’re your insurance partners: (866) 621-1770 24/7.