If your car breaks down, will insurance cover a rental?
Rental reimbursement insurance is designed to cover the cost of renting a car following an at-fault accident or another type of covered claim. It’s important to note, however, that while you may have rental reimbursement coverage as part of your policy, it likely doesn’t cover your rental car costs in all circumstances. For example, if your car breaks down due to a mechanical defect or breakage, rental reimbursement will not help to pay for a rental.
How does rental reimbursement work?
Rental reimbursement works like other claims filed with your insurance company. When you file a claim for rental reimbursement, your insurer will extend coverage up to your coverage limits. The limit could be a total amount, like $900, or a set amount of $30 a day up to $900 total. There are different coverage limits for rental reimbursement, so experts recommend reviewing your coverage options with an insurance agent.
Here’s how rental reimbursement works:
- Purchase an endorsement for rental reimbursement. In most cases, an endorsement must be added to have rental reimbursement coverage, and it has to be added to each vehicle on your policy. Rental reimbursement provides coverage for claims filed under your comprehensive or collision insurance. Because of this, some insurers require both comprehensive and collision coverage on your policy; others only require comprehensive. If you only have comprehensive and not collision, you would not have rental reimbursement for accidents that fall under the collision category.
- File a claim. Depending on the insurance company, you can typically file a claim online, in person, over the phone or on the insurer’s mobile app.
- Check your coverage amount. Your rental reimbursement coverage will either cover you up to a specific dollar amount per day or a total amount. Find out your allotted amount before you rent a car so you know whether you’ll need to pay for anything on your own.
- Choose a rental car. Most insurance companies have partnerships with rental car agencies. If you go with one of the partnered companies, the insurer will pay the agency directly for your rental car. If not, you may have to pay for the cost up front and then get reimbursed by the insurance company.
- Confirm the details with the rental car agency. Before leaving with your rental car, go over what the costs will be, who pays and when you have to return the car. You will usually only have approval from the insurance company for the time it will take the shop to repair your car.
When does car insurance cover rental costs?
Car insurance will cover rental costs after a qualifying claim is filed and approved. However, you must already have rental reimbursement on your policy prior to the accident for there to be coverage. If you are not at fault, the other driver’s property damage liability insurance will likely pay for your rental car while your vehicle is being repaired.
When does car insurance not cover rental costs?
There are some instances when you may not be able to lean on your rental reimbursement coverage for your rental costs. For example, you may have two vehicles listed on your policy: a car and a truck. If only the car has rental reimbursement coverage, but the truck is in an at-fault accident that requires a rental, your rental reimbursement coverage would not apply.
Some other cases where rental car expenses are not covered include:
- Vacationing rental: If you are headed out of town and want to rent a car at your destination, you will have to pay rental fees out of pocket. Your policy would not cover rental expenses, regardless of whether your trip is for business or pleasure.
- Mechanical breakdown: If you are left carless because of a mechanical issue, rental reimbursement coverage does not step in. Instead, it only pays for rental car costs if your car is out of commission due to a covered loss.
- Routine maintenance: Similar to mechanical breakdown, if your car is in the shop for standard maintenance, your car insurance will not cover the costs.
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Powered by Coverage.com (NPN: 19966249)
Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in states where it is licensed. Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.
Does car insurance include rental reimbursement coverage?
Rental reimbursement coverage is not standard in many car insurance policies, but several insurance providers offer it as an add-on or supplemental coverage. Insurance professionals recommend that drivers consider adding it as its price usually does not impact the cost of your car insurance policy very much. Plus, having this type of coverage can be valuable in cutting your costs should you be involved in an accident.
According to the Insurance Information Institute, vehicles are typically in the shop for an average of two weeks after an accident. If you rely on your car to get back and forth to work or for other daily needs, two weeks of rental car fees can easily add up when you’re paying out of pocket.
Even in cases where an accident is not your fault and rental expenses are covered by the other driver’s insurance, sorting out these details can take time. If you have your own rental insurance coverage, you’ll be able to get a rental vehicle right away while resolving the claims process.
Rental car reimbursement vs. other optional coverage types
To better understand rental reimbursement and loss of use coverage, it may be beneficial to differentiate the two from other similar-sounding or similar-functioning coverage types.
| Coverage type | Meaning |
|---|---|
| Rental reimbursement or loss of use coverage | Optional coverage that pays for a rental car if you are involved in an accident or experience damage that is covered by your insurer. |
| Rental car insurance | Standalone policies that cover rental cars if you are involved in an accident while driving a rental. In most cases, your auto insurance policy will extend coverage to your rental car to cover it like your regular vehicle. But you may need extra coverage if your insurer restricts this extension or your policy does not have comprehensive and collision coverage and you need it for your rental car. |
| Mechanical breakdown coverage | Optional insurance that covers mechanical breakdowns of a car’s internal parts, like its transmission or drivetrain. It does not cover general maintenance, so you may want to consider its inclusions before purchasing it. Mechanical breakdown coverage does not include rental car reimbursement coverage. |
Do you need rental reimbursement coverage if you are not at fault in an accident?
If you are left without a vehicle because of an accident another person caused, their property damage liability insurance should step in to cover the cost of your rental car. Generally, this coverage will pay for a reasonable replacement, meaning it may cover a vehicle similar to the one you own. And usually, you will continue getting rental car coverage from the at-fault driver’s policy until your car is repaired, or if the vehicle was totaled, until you are paid for your vehicle.
However, since determining fault in an accident can take time, most insurance experts recommend purchasing your own rental reimbursement coverage. If someone else is at fault in an accident, you can use your own coverage immediately and then have your insurance company recover the cost for the rental car from the at-fault party or their insurance company once the fault has been determined.
In sum, rental reimbursement coverage is an add-on that can pay for a rental if you add it to your policy and then experience a covered loss. But it has its limits, so policyholders cannot expect it to pay for all rental scenarios. If you only have one vehicle, most insurance experts recommend rental reimbursement coverage due to the low cost and peace of mind it can provide.
Frequently asked questions
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While the costs can vary from provider to provider, rental car reimbursement coverage is usually relatively inexpensive. It will often be cheaper than renting a car out of pocket even once after a covered loss. Most insurance experts generally recommend it as a way to save money if your car is damaged in a covered event.
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Whether or not your car insurance policy will pay to tow your car if it breaks down depends on whether you have roadside assistance included on your policy. Like rental reimbursement insurance, roadside assistance is a common optional coverage you can add to your policy with most insurers. If you have a roadside assistance policy or endorsement, it generally provides coverage for towing (up to a certain mileage limit), lockout services, tire changes, battery jumps, fuel delivery and more in some cases. If you do not have this optional endorsement on your policy, you will typically have to pay for towing yourself.
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When looking for personal car insurance that covers rentals, it’s important to know that no single company is always the “best” option for everyone. You will generally want to think about your priorities when looking for the best car insurance for your needs. For example, if cost is your most important consideration, it’s likely that you’ll want to look at companies with a demonstrated record for writing cheap insurance. If you work from home or are retired, you may be better suited by a company that writes low-mileage insurance. If you have a few dings on your license, a company known for writing high-risk insurance may offer you benefits. Having said that, a few of the companies you may want to look at for rental reimbursement coverage include Progressive, Allstate and State Farm.
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