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Arranging for car repairs isn't the only headache you face after a car accident. While your car is out of commission at the repair shop, how will you get around? If you have rental reimbursement on your policy, your auto insurance may pay for a rental car after an accident for up to 30 days. However, rental reimbursement isn't part of every insurance policy and has some limitations that are important to know.
Will Insurance Pay for a Rental Car After an Accident?
If you've added rental reimbursement coverage to your auto insurance policy, your insurance will pay for a rental car while your vehicle is in the shop for covered repairs after an accident.
Rental car reimbursement isn't automatically included in a standard auto insurance policy; adding it typically costs $2 to $15 per month. You generally can't buy rental reimbursement coverage unless you have comprehensive and collision coverage for your vehicle.
Learn more >> What Is Full Coverage Car Insurance?
How Does Rental Reimbursement Work?
Rental reimbursement helps cover the cost of renting a car while your vehicle is undergoing repairs due to a covered loss. It doesn't pay for renting a car while yours is being serviced for maintenance or repairs unrelated to an insurance claim. For details on the specific situations that qualify for rental reimbursement, check your insurance policy or contact your insurance agent.
Insurance companies usually cap how much they'll pay per day and per claim for your rental car, as well as the number of days they'll pay. Typically, per-day rental reimbursement is capped at a dollar amount or a percentage of the per-day rental cost.
Example: Your policy might limit reimbursement to $50 per day, up to $1,500 per claim, for a maximum of 30 days.
Rental reimbursement coverage ends when your vehicle is repaired. If your car is repaired on Friday but you don't pick it up until Monday and drive your rental all weekend, you'll be responsible for Saturday's and Sunday's rental costs.
Do You Choose Your Rental Car?
The way insurers handle rental reimbursement can vary. Some companies let you rent a car from any company you choose. This typically means you'll pay for the rental upfront and request reimbursement after you return the rental car.
Other insurers require using a car rental company in their network. This can simplify the process, because the insurer usually pays the car rental company directly. You won't have to worry about out-of-pocket expenses unless the car you rent costs more than your insurer's reimbursement cap.
How Long Will Insurance Pay for a Rental Car?
Most rental reimbursement coverage lasts a maximum of 30 days. This is usually plenty of time, since it takes an average of two weeks to repair a vehicle, according to the Insurance Information Institute.
In some cases, however, car insurance may pay for a longer car rental. For instance, an insurer may cover your rental costs for as long as repairs take, provided you have the insurer arrange the rental and use a repair facility they approve.
What if you're involved in an accident, and the other party's auto insurance is covering your repairs? Using your own insurance policy's rental reimbursement coverage can be faster than waiting for the other person's insurance to assess financial responsibility. You generally won't pay a separate deductible for rental reimbursement. However, you are responsible for paying your car insurance deductible for the repair work.
Rental Reimbursement Limits
There are some common limits on rental reimbursement to know before you add this coverage to your policy.
- Daily reimbursement limits are typically a dollar amount or a percentage of the rental cost. For example, your insurance might cover $30 per day toward rental reimbursement or 80% of the daily cost. Per-day limits are usually based on the cost of renting a basic economy car, which may not be enough to pay for a bigger rental, such as a pickup truck. If you're insuring a larger vehicle that costs more to rent, your insurance agent may be able to increase your daily reimbursement cap. If not, you'll pay the difference out of pocket.
- Per-loss reimbursement limits are usually a dollar amount. For instance, insurance might limit total rental reimbursement to a maximum of $1,000 per covered loss.
- The reimbursement coverage limit is typically 30 days.
Frequently Asked Questions
Rental reimbursement coverage doesn't pay to rent a car while yours is being serviced or repaired for anything other than an insurance claim. Some insurance companies sell car repair insurance, which helps pay for repairs due to covered mechanical breakdowns. Car repair insurance sometimes includes rental reimbursement coverage.
If you rely on your car to get to work or school every day, buying rental reimbursement coverage may make financial sense. It costs an average of $57 per day, $346 per week or $1,482 per month to rent a car in the U.S., according to travel website Kayak. The $2 to $15 per month you'll typically pay for rental reimbursement is a bargain in comparison.
If going without your car wouldn't be a major inconvenience—for instance, you can borrow a family member's car—you may prefer to skip rental reimbursement coverage to save a bit on your premiums.
You can add rental car reimbursement coverage to your policy after an accident, but it won't cover the cost of a rental car for that accident. Car insurance doesn't cover losses that take place before purchasing a policy or, in this case, before buying extra coverage.
Learn more >> Steps to Take After a Car Accident
The Bottom Line
Renting a car can get expensive fast, especially if your car is in the shop for a week or more. Rental car reimbursement coverage helps you get back on the road without digging too deep into your emergency fund. To offset the extra cost of rental reimbursement insurance, look for ways to lower your premiums.
Shopping around and comparing car insurance quotes from different companies could cut the cost of auto insurance. So could maintaining good credit. Insurance companies may use credit-based insurance scores when setting your insurance premiums. Although these aren't the same scores lenders use, they're based on similar information from your credit report. Positive habits like paying bills on time and keeping credit utilization low can help you improve both types of credit scores, potentially saving you money on car insurance.