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If your vehicle is damaged in an accident or other covered incident, you may need to rent a car while it’s being repaired or replaced. Car insurance typically doesn’t cover this unless you added rental car reimbursement coverage to your policy. This coverage will reimburse you for renting a vehicle while your automobile is in the shop or you hunt for a replacement.

Key Takeaways

  • Rental car reimbursement insurance is optional coverage you can add to your car insurance policy.
  • Rental car reimbursement coverage doesn’t have a deductible.
  • It usually covers $30 to $60 per day in rental costs, depending on your policy.

What is rental car reimbursement insurance?

Rental car reimbursement insurance is a type of car insurance that pays for a rental vehicle if your personal auto is damaged or declared totaled after a covered accident. It is optional coverage that you can add to your car insurance policy for an additional premium.

Rental car reimbursement coverage is important if you rely on your car to get to work or other activities. Paying to rent a car out of pocket while you wait for your car to be repaired or while you shop for a replacement car can get pricey.

What does rental car reimbursement cover?

Rental car reimbursement covers the daily cost of renting a vehicle while your auto is being repaired or replaced after a covered accident or loss. In many cases, the coverage will also pay for other forms of transportation, such as a taxi or public transportation. Typical daily rental cost limits range from $30 to $60, often including taxes and fees, and coverage usually lasts around 30 days from the date of an approved claim.

However, your insurance won’t cover everything. “Your insurance may cover the rental cost, but not gas, tolls, or any damage while the car is with you,” says Hugh Allen, principal product strategist at Hi Marley, an online insurance platform.

Note that rental car reimbursement insurance is not the same thing as rental car insurance. The latter is a temporary, standalone policy that covers a rental car while it’s in your possession. It works the same way your personal auto insurance does, but a rental agency sells it.

When will your insurance cover a rental car?

If you have a car insurance policy with optional rental reimbursement coverage, your insurance will cover your rental car if it meets specific requirements.

This type of coverage typically applies when your vehicle is in the repair shop due to a covered event, such as an accident or damage covered under your comprehensive or collision insurance. However, rental reimbursement coverage does not usually apply if your car is in the shop for routine maintenance, mechanical breakdowns, or repairs unrelated to an insurance claim. 

Additionally, most policies have daily and total reimbursement limits, meaning your insurance will only cover rental costs up to a specific dollar amount per day and for a limited number of days. It’s important to check your policy details to understand the exact terms and conditions of your rental car coverage.

Situations when your insurance will pay for a rental car

To get reimbursed, your car insurance policy must cover the accident or loss. You’ll need to have either collision or comprehensive coverage, and the damage must be covered under one of those types of insurance. While the precise types of damage that your car insurance covers may vary, some examples of covered damage include: 

Collision insurance

  • Collision with a stationary object, such as a sign or pole
  • Collision with another car
  • Collision with a structure, such as a wall

Comprehensive insurance

  • Damage from vandalism or theft
  • Damage from falling trees or striking an animal
  • Damage from weather events like hail and floods
  • Damage from fire or explosions

When won’t insurance cover a rental car?

If your vehicle needs to be replaced for a reason other than a covered accident or loss, your rental car reimbursement coverage won’t cover the cost. For example, if your car suffers a mechanical breakdown, something typically excluded from car insurance coverage, rental reimbursement insurance won’t pay for a rental.

Insurance also won’t pay for rental costs that exceed your daily limit. 

“Keep in mind that some vehicles cost more to rent, and you may need to cover any extra costs beyond what your policy allows,” says Allen. 

For example, if your rental reimbursement coverage is $50 per day, and you rent a car that costs $60 per day, you’ll be on the hook for the $10-per-day difference. In addition, if you need the rental for more time than your policy allows, you’ll need to pay out of pocket.

How to file a rental car claim during repairs

After an accident, you must file a claim with your car insurance company for any damages incurred. You’ll need to provide information about yourself and your policy, as well as documents such as photos of the damage and copies of a police report (if required). This will get the claims process started.

If your car needs to be repaired or replaced, let the insurance company know immediately. The insurer can tell you whether the damage falls under your comprehensive or collision coverage. If you have rental reimbursement insurance, make sure the insurer provides you with options to file a claim under that coverage.

The insurer will tell you if it prefers any specific rental car companies that will bill them directly for the cost of the rental vehicle. If you’d rather rent the car from a company that the insurer doesn’t have a relationship with, you may have to submit receipts to the insurer to receive reimbursement instead.

Pros and cons of rental car reimbursement coverage

Pros

  • Pays for the cost of a rental car or other forms of transportation, which could save you hundreds of dollars
  • It lasts for as long as 30 days, typically enough time to have your car repaired or replaced
  • Doesn’t have a deductible

Cons

  • Optional coverage is an added car insurance expense
  • Limited to a daily dollar amount, which could mean renting a more modest vehicle than you’d prefer
  • Doesn’t pay for a rental unless related to a covered loss

Frequently asked questions

Is rental car reimbursement included in full coverage insurance?

Rental car reimbursement is typically not part of a standard car insurance policy, which includes liability, collision, and comprehensive coverage. Instead, it’s optional protection that you can purchase to supplement your full coverage policy.

What to do if your insurance doesn’t cover a rental car

If you don’t have rental reimbursement coverage, you’ll need to pay for the rental car out of pocket. However, if another driver causes the damage, their car insurance policy may pay for the cost of a rental car.

How much does rental car reimbursement cost?

Rental car reimbursement coverage usually costs between $2 and $15 per month in addition to your regular car insurance premium.

Can an insurance company deny a claim after approving it?

An insurance company can deny a claim after approval, although this is rare. Usually, this only happens if you omitted information while filing the claim that would have caused the insurer to deny the claim if they knew about it. Insurers may also deny a claim after approving it if you committed fraud, such as if you lie about the details regarding your accident.

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Zack Sigel

 
  

Zack Sigel is a writer and editor based in New York City. He has been managing editor at Policygenius and M1 Finance, where he led teams specialized in writing about business and finance, and he has also written about music and culture for Hyperallergic, VH1, Complex, and the Los Angeles Review of Books. Zack has a bachelor's degree from New York University, Tisch School of the Arts.

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