If Your Car Breaks Down, Will Insurance Cover a Rental?

If you own a vehicle, at some point you may be involved in a car accident. Auto accidents are a part of life, unfortunately. According to National Highway Traffic Safety Administration data (download “National Statistics”), there were 232,781,797 licensed drivers in the U.S. in 2021. In the same year an astounding 6,102,936 motor vehicle traffic accidents were reported.

If you're in an accident, you could wait days or weeks for your car to be repaired. Rental reimbursement coverage helps cover the cost of a rental car or if your vehicle is in need of repair after a covered accident. The optional insurance coverage is offered through some insurance providers as an add-on to your auto insurance policy.

How does rental reimbursement work?

Rental reimbursement coverage is a type of optional auto insurance coverage offered by some insurance companies that helps to cover the cost of renting a car while your car is being repaired from a covered accident. Depending on your policy, rental reimbursement coverage may also apply to vehicles you don’t own that are involved in a covered accident, such as a car you rented for a family vacation.

You usually need comprehensive and collision coverage to get rental reimbursement added to your policy. Insurance providers sometimes refer to this as “transportation expense coverage,” especially if coverage extends beyond rental cars to other forms of transportation, such as buses, trains, and car services.

Generally, coverage only lasts while the vehicle is at a repair facility or is deemed unsafe to drive. Also, insurance companies set daily limits and overall limits for rental costs. Daily limits depend on how much coverage you choose and typically range from $40 to $60. Coverage usually lasts up to 30 days, depending on the provider. The authorized time limit can change if the vehicle is a total loss.

Typically, you have two options for rental car reimbursement.

1. Work with your insurance company's preferred rental car company. You often get a more seamless reimbursement process if your insurance provider has an existing relationship with a rental car business. You may even have the option for the rental company to bill your insurance company directly.
2. Rent a vehicle from another rental company. If you choose another rental car company, you can submit your receipts and a claim form to your insurance company for reimbursement.

Rental reimbursement coverage has no deductibles. If the rental car cost exceeds your daily and overall limits, you'll have to pay the difference out of pocket.

Does car insurance include rental reimbursement coverage?

Rental reimbursement coverage is typically not automatically included in an auto insurance policy. It's an optional insurance endorsement, known as a “rider,” that you can add to your existing policy.

Reimbursement coverage extends to eligible claims covered under your comprehensive or collision insurance. Insurers typically require both coverages to add a rental reimbursement endorsement.

Rental car reimbursement vs. rental car insurance

Rental car reimbursement is not the same as rental car insurance. Insurance companies offer rental car reimbursement as an optional add-on to your insurance policy. It helps cover the costs of a rental car while your vehicle is being repaired after a covered accident.

Rental car insurance is a separate coverage offered by rental car companies that protects you and the vehicle during the rental period. You must have at least liability insurance to rent a vehicle, but you may not need to buy insurance through the rental company. Your existing auto insurance policy may extend to cars you rent.

Rental car reimbursement vs. mechanical breakdown coverage

If your vehicle breaks down, rental car reimbursement coverage will not cover the costs of a rental vehicle while your car is being repaired. Insurance companies only reimburse rental costs for covered accidents, not mechanical issues.

Some insurance providers offer optional mechanical breakdown coverage, which sometimes includes an allowance to cover rental car costs while your vehicle is in the shop. Mechanical breakdown coverage typically provides coverage after a vehicle's warranty expires or has a warranty that doesn't include mechanical failure.

When will car insurance pay for rental costs?

Rental reimbursement coverage helps cover the cost of a rental vehicle or alternative transportation while your vehicle is being repaired from a covered accident. The specific accidents or perils covered depend on your provider and policy. If you have collision coverage, rental reimbursement coverage would help pay for a rental car while your car is in the repair shop after a collision. If you have comprehensive coverage, it might also cover rental costs for repairs from covered perils such as hail, a falling tree or branch, or vandalism.

When will car insurance not pay for rental costs?

Even with rental reimbursement coverage, you may still have out-of-pocket costs while your car is in the shop. Rental reimbursement coverage does not cover the following:

• Gas.
• Mileage.
• Security deposit.
• Additional insurance coverage through the rental company.

Insurance companies set daily and overall limits on rental reimbursement. If the daily rate for your rental is more than the allotted limit, you must pay the difference. Depending on how long your vehicle is unavailable, you can extend your reimbursement benefits and avoid paying out of pocket by choosing a rental car with a lower daily rate.

As mentioned, rental reimbursement coverage doesn't cover rental costs if your car breaks down due to mechanical issues.

Do you need rental reimbursement coverage if you are not at fault in an accident?

If you're involved in an auto accident where the other driver is at fault, their insurance company may pay for your rental car. Depending on how quickly the claims process takes, you may want to use your rental reimbursement coverage regardless of who is at fault. If the other driver is later determined to be at fault, your insurance company will be reimbursed by the other driver's provider.

TIME Stamp: Consider adding rental reimbursement coverage to your policy.

Rental reimbursement coverage may come in handy if you're ever in an accident and need to rent a vehicle for an extended period while yours is in the shop. The cost is relatively low compared with rental car costs in most cases. Your provider may offer different coverage options and limits based on your needs and how much you want to spend.

Check with your insurance provider to see if it offers rental reimbursement coverage and get a quote. Any time you're making changes to your insurance policy is an excellent time to check rates through other insurance providers.

Frequently asked questions (FAQs)

Who has the best car insurance with rental reimbursement coverage?

The best insurance company with rental reimbursement coverage varies depending on your needs, where you live, and other factors. Get quotes from several insurance companies to find the best premiums. Check with your current insurance provider to see if it offers rental reimbursement coverage.

Which credit cards cover car rental insurance?

Several credit cards come with rental car insurance benefits. Some cards come with primary coverage, meaning you aren't required to file a claim through your personal car insurance company first. Others feature secondary coverage, which only kicks in for whatever your personal insurance doesn't cover. Popular credit cards with car rental insurance benefits include:

• Chase Sapphire Reserve®.
• Chase Sapphire Preferred®.
• Capital One Venture X Rewards.
• United Club℠ Infinite.
• American Express Gold.
• Chase Freedom Flex℠.

What happens if I get into an accident in a rental car?

Your auto insurance policy may cover damage to a rental car if you're in an accident. Rental car companies offer optional insurance coverage you can purchase. Most states require you to have at least liability insurance to drive. You must have car insurance to rent a vehicle.

How long will insurance pay for a rental car?

Rental reimbursement time limits vary between insurance providers. Coverage generally lasts up to 30 days, depending on your situation and the policy's daily and overall limits.