Guide · 8 min read
Insurance replacement rental billing explained.
Replacement rentals are the most profitable work a Canadian rental agency can take on — and the easiest to get short-paid on. The rental itself is simple. The billing is where money leaks. This guide walks through the authorization window, the split between insurer and driver, the four reasons invoices come back light, and what a clean bill looks like.
1. The authorization window is the whole game
When an adjuster authorizes a replacement rental, they approve two things: a number of days and a daily rate — sometimes also a vehicle class. That combination is the only portion of the rental the insurer has agreed to pay. Everything else is a conversation with the driver.
The critical detail is timing. An extension approved after the days have already been used is a favour, not an obligation. An extension approved before is simply more authorized days. Agencies that call for re-authorization on day four of a five-day window get paid; agencies that call on day nine argue.
- · Record the claim number, policy number, adjuster, and authorized dates at intake.
- · Set a reminder one day before the window closes, not on the day it closes.
- · Log every extension with who approved it and when.
2. What the insurer pays vs. what the driver pays
| Charge | Usually billed to |
|---|---|
| Authorized days at the authorized rate | Insurer |
| Days beyond the authorization window | Driver |
| Vehicle class upgrade above what was approved | Driver |
| Fuel not returned, tolls, traffic tickets | Driver |
| Excess kilometres beyond the allowance | Driver |
| New damage found on return | Driver (or their insurer) |
| Applicable HST/GST | Whoever is paying that line |
Terms vary by insurer and by claim, so treat this as the default and confirm the specifics in writing when the authorization comes in.
3. The four reasons invoices come back short
- Day counts that don't match the agreement. If the signed contract says the car went out on the 27th and came back on the 28th, the invoice needs to bill that same period on the same basis. A hand-typed invoice drifts, and any drift is a reason to pay less.
- Days outside the window. Billing ten days against a seven-day authorization gets a seven-day payment and a three-day write-off — unless those three days were invoiced to the driver instead.
- A rate above the approved rate. Even a few dollars a day over gets adjusted down without a phone call.
- Missing references. No claim number, policy number, or adjuster name means the invoice sits in a queue instead of a payment run.
4. What a clean bill looks like
Split the rental at the authorization boundary and issue two documents. The insurer invoice covers authorized days at the authorized rate, with claim, policy, and adjuster references, and your GST/HST registration number. The renter invoice covers overruns, upgrades, fuel, tolls, and damage. Both derive from the same signed agreement, so the dates and day counts cannot disagree.
Then track them. A replacement invoice that nobody follows up on for thirty days is indistinguishable from one that was never sent. Unpaid → paid → collections, with a note on every call, is the difference between a receivable and a loss.
Rental Flow AI generates both invoices directly from the agreement — see how split invoicing works.