Will your insurance pay for a rental car while your car is in the repair shop?

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Insurance will pay for a rental car while your car is in the repair shop only if you added rental reimbursement coverage to your car insurance. Without this optional coverage, you’ll typically have to pay for a rental yourself unless another driver’s insurance covers the cost.

If your vehicle is damaged in a covered accident or loss, rental reimbursement can help cover the daily cost of a temporary vehicle while yours is being repaired or replaced. Coverage applies only after your insurer approves the claim and is subject to daily and total payout limits.

When will insurance pay for a rental car?

Your insurance will pay for a rental car if:

• You added rental reimbursement coverage
• The damage is from a covered claim (collision or comprehensive)
• The rental cost stays within your daily and total limits
  

It won’t pay if:

• The repair is due to maintenance or mechanical breakdown
• You exceed your coverage limits
• The claim itself is denied

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.

When will your insurance cover a rental car?

Rental car reimbursement coverage applies only when your vehicle is being repaired or replaced due to a covered claim under your collision or comprehensive insurance. It does not apply to routine maintenance, mechanical breakdowns, or repairs unrelated to an approved insurance claim.

Rental coverage doesn’t stand alone. It works alongside a covered loss. If your insurer approves your claim and you added rental reimbursement to your policy, the coverage typically activates immediately.

When does rental car coverage kick in?

Here’s how rental car coverage works in common situations:

When won’t insurance cover a rental car?

Insurance won’t pay for a rental car if you don’t have rental reimbursement coverage or if the underlying damage isn’t from a covered claim. Even when you do have coverage, there are limits on how much and how long your insurer will pay.

Here are the most common situations where rental costs aren’t covered:

• You didn’t add rental reimbursement coverage. Rental benefits are optional. If it’s not listed on your policy, you’ll need to pay for the rental yourself unless the at-fault driver’s insurance agrees to cover it.
• The damage isn’t from a covered loss. Mechanical breakdowns, routine maintenance and wear-and-tear repairs aren’t covered by auto insurance — so rental reimbursement won’t apply. It only activates after a collision or comprehensive claim is approved.
• Your claim is denied. If your insurer denies the primary claim, rental reimbursement won’t kick in.
• You exceed the time limit. Most policies limit rental coverage to a set number of days, often up to 30 days. If repairs take longer — or your car is totaled and you need extra time to shop for a replacement — you’ll be responsible for any additional rental costs.
• You exceed your daily limit. Rental reimbursement has a per-day cap.

 “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 policy covers $50 per day and your rental costs $60 per day, you’ll pay the $10 difference out of pocket.

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Where can you get rental car reimbursement coverage?

You can add rental reimbursement to your auto insurance coverage directly through your auto insurance company. It’s typically offered as an optional add-on when you purchase or update your policy.

Most insurers allow you to:

• Add it when starting a new policy
• Add it during a policy renewal
• Update your coverage mid-term by contacting your insurer or logging into your online account

Because it usually costs only a few dollars per month, many drivers choose to add it before they ever need it — since it can’t be added after an accident has already happened.

How do you get insurance to pay for a rental car during repairs?

Once your insurer approves the underlying collision or comprehensive claim and confirms you have rental reimbursement coverage, they’ll either arrange a rental directly or reimburse you within your policy limits.

Here’s how the process typically works:

• File your auto insurance claim. After the accident or covered loss, report the damage to your insurer. Rental benefits only apply once the primary claim is opened and approved.
• Confirm you have rental reimbursement coverage. Ask your adjuster to verify your daily limit, total maximum payout and how long coverage will last.
• Arrange the rental. Many insurers work with preferred rental companies and can set up direct billing, so you don’t have to pay upfront. If you rent outside their network, you may need to pay first and submit receipts for reimbursement.
• Stay within your limits. Your policy will have a daily dollar cap and a maximum number of days. If your rental costs more than your daily limit, you’ll pay the difference.

What are the pros and cons of rental car reimbursement coverage?

Pros

• Covers the cost of a rental car after a covered claim, potentially saving you hundreds of dollars out of pocket
• Typically lasts up to 30 days, which is often enough time for repairs or a total loss settlement
• No deductible applies to rental reimbursement benefits
• May cover other transportation options, such as rideshare or public transit, depending on your policy
  

Cons

• Adds a small cost to your monthly premium
• Subject to daily and total payout limits, which may not fully cover higher-priced rentals
• Only applies after a covered collision or comprehensive claim
• Coverage ends once repairs are complete or a total loss settlement is issued

Is rental car reimbursement worth it?

Rental car reimbursement coverage typically costs between $2 and $15 per month. Whether it’s worth it depends on how much you rely on your vehicle and how quickly you could absorb rental costs out of pocket.

Rental reimbursement is often worth it if:

• You depend on your car for work
• You don’t have access to another vehicle
• You can’t easily cover $500–$1,000 in unexpected rental costs
  

It may be less essential if:

• You have a second vehicle
• You work remotely
• You have reliable alternative transportation

For many drivers, it’s a relatively inexpensive way to reduce stress after an accident.

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

If your car’s in the shop and you don’t have rental reimbursement coverage, you’ll probably be stuck paying for a rental out of pocket. That said, you do have some options to keep costs down or shift them to someone else.

• Pay out of pocket and request reimbursement. You can rent a car yourself and then try to get reimbursed by the at-fault driver’s insurance company if another driver caused the accident. Their liability coverage might cover the rental, but keep in mind it’s not always guaranteed and the payout can take time.
• Use the at-fault driver’s insurance. If the other driver is clearly responsible, their insurer may step in and cover your rental directly. In that case, you’ll need to wait for them to determine fault and work with their claims adjuster to set things up.
• Consider alternative transportation. If renting a car isn’t practical, rideshare services like Uber or Lyft, public transit, or borrowing a car from a friend or family member can help you get around until your car is fixed or replaced.

Rental reimbursement coverage helps pay for a temporary vehicle while your car is being repaired after a covered claim, reducing out-of-pocket costs and transportation disruptions. Without it, you’ll need to cover rental expenses yourself, rely on the at-fault driver’s insurance or arrange alternative transportation.

Because rental reimbursement typically costs only a few dollars per month, one claim can easily exceed what you’ve paid for the coverage in a year. Reviewing your policy now can help you decide whether the added protection makes sense based on how much you depend on your vehicle.

Can a credit card cover your rental car?

Some credit cards offer rental car coverage, but it usually does not replace rental reimbursement coverage on your auto insurance policy.

Here’s the important distinction:

• Credit card rental coverage typically protects the rental car itself from damage or theft.
• Rental reimbursement coverage pays for the cost of renting a vehicle while your car is being repaired after a covered claim.

That means your credit card may cover damage to the rental car, but it usually won’t pay for the rental because your own vehicle is in the shop.

If you plan to rely on credit card benefits, check:

• Whether coverage is primary or secondary
• Rental length limits
• Excluded vehicle types
• Country restrictions

Zack Sigel

 

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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.