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Rental car reimbursement is an optional add-on to your car insurance policy that can cover the cost of a rental vehicle or other transportation while your car is being repaired or replaced due to a covered reason.
You may consider adding rental car reimbursement to your auto policy if you're concerned about that unexpected cost and you don't have a lot of savings. However, the ongoing cost of the coverage may not be worth it if you're on a tight budget. Here's what to know.
What Is Rental Car Reimbursement Coverage?
Rental car reimbursement coverage is a feature you can add to your auto insurance policy to help pay for transportation if your vehicle is being repaired or replaced under a covered collision or comprehensive claim.
More specifically, it may help cover the cost of the following:
- Daily rental car rate
- Bus fares
- Train tickets
- Taxis
- Rideshare services, such as Uber or Lyft
If you're not at fault in the accident, the other driver's insurance may cover the cost of your rental car, but filing a claim with your insurer may speed up the process. The coverage is typically structured to provide a certain amount of money each day—usually $30 to $60—up to a maximum number of days or a dollar cap.
If you work with a rental car company that partners with your insurance company, the rental agency may bill the insurer directly. Otherwise, you'll need to pay the full amount out of pocket and then submit a claim to your insurance provider. However, depending on the cost of the rental car, that may not be enough to foot the bill completely.
Learn more >> How a Car Accident Can Impact Your Car Insurance Rate
What Rental Car Reimbursement Doesn't Cover
Because rental car reimbursement only kicks in if you have a covered collision or comprehensive claim, you likely won't receive financial protection if you don't have those types of coverage.
It's also important to note that rental car reimbursement won't cover you if your car is in the shop for maintenance or repairs that are unrelated to a covered insurance claim, or if you rent a car for leisure or business purposes.
Example: Let's say that you've gotten in an accident, and the body shop anticipates it'll take 10 days to repair your vehicle. You have rental car reimbursement that offers $40 per day in coverage for up to 30 days, but the rental car you choose costs $60 per day, including taxes and fees.
When you complete your rental period, you'll pay the full $600 out of pocket, then you'll submit a claim to get $400 of that reimbursed, and you'll still be out $200.
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How Much Does Rental Car Reimbursement Coverage Cost?
The cost of adding rental car reimbursement will vary depending on your insurance company and how much coverage you request. In general, though, a year's worth of coverage may cost less than what you'd pay for just one or two days of rental car fees paid out of pocket.
For context, the average cost of a rental car is $38 per day, according to Kayak, and auto body shops take an average of two weeks to complete repairs.
Returning to our example above, if your insurance company charges $60 per year for $40 in daily reimbursement, you have to pay that rate for more than six and a half years to equal the $400 you'd pay out of pocket without coverage.
Should I Get Rental Car Reimbursement Coverage?
There are several situations where it could make sense to opt for rental car reimbursement, including:
- You rely on your car for daily use
- Your insurer offers good coverage with a relatively low premium
- You don't have a robust emergency fund
On the flip side, it may not be worth it in the following situations:
- You have a second vehicle you can use
- You're on a tight budget and can't afford the premium
- You have sufficient emergency savings
Learn more >> Hidden Costs of Minimum Coverage Car Insurance
How Much Coverage Do I Need?
The amount of coverage to consider will depend on what your insurance company offers and your peace of mind.
If your insurer offers multiple coverage options—say $40, $50 or $60 per day—take a look at the cost difference between the choices to determine the right balance for you. In some cases, it may be less than a dollar per month more to get the maximum amount of coverage.
Shop Around to Get the Best Car Insurance Rates
If it's been a while since you've purchased car insurance, it may be a good time to shop around to ensure you're still getting the best rate on rental car reimbursement and other coverages. Experian can help you compare car insurance quotes from top insurers in one place.
You can also get notifications when rates in your area go down, making it easier to always make sure you're paying as little as possible for the coverage you need.