What is rental car reimbursement coverage and how does it work?

Rental car reimbursement coverage is an optional endorsement, or add-on, to your auto insurance that helps pay for a rental car while your vehicle is being repaired after a covered claim. If an accident, theft, vandalism, or other covered event sidelines your car in the shop, this endorsement will help cover some or all of the cost of temporary transportation, depending on your policy limits. 

What is rental car reimbursement car insurance?

Rental car reimbursement coverage is a type of car insurance that helps cover transportation costs after a covered claim. Rather than protecting your vehicle itself, this coverage helps you secure alternative transportation while repairs are underway. Depending on the specifics of your policy, it can help pay for a rental car or reimburse public transportation, taxi, or rideshare expenses.

To add rental car reimbursement to your auto insurance, insurers typically require you to also carry collision and comprehensive coverage — generally called full coverage insurance — since reimbursement only applies when a claim is covered. This means your insurance will only pay for a rental if the damage to your vehicle is caused by a specific event your policy already protects against, such as a wreck or theft. 

It typically does not matter who was at fault for the accident, but the coverage will not kick in for routine maintenance or mechanical breakdowns that aren't related to an insurance claim.

Rental car reimbursement policy limits

Policies typically specify a limit on daily payouts and total payouts. Common rental car reimbursement daily caps usually range from $30 to $50. Total per-claim payouts are often capped at a dollar amount (like $900) or a number of days (like 30). 

However, limits vary by insurer. Check your policy documents for specifics, or contact an agent for help verifying your policy limits. 

How rental car reimbursement works

Reimbursements typically work in one of two ways: 

• Direct billing: The insurer pays a preferred rental agency directly, and you only cover any costs above the daily limit.
• Reimbursement: You pay upfront and submit receipts to your insurer for reimbursement.

How long will insurance pay for a rental car?

In most cases, rental car reimbursement is only available while your vehicle is being repaired or until you have reached your per-claim maximum. But if your car is totaled, coverage may continue until your insurer issues a settlement on the vehicle.

Even if a delay is out of your control, such as a parts shortage or repair backlog, your rental car reimbursement coverage only extends to the limits set by your policy. 

Do I have to pay a deductible for rental car reimbursement coverage?

Rental car reimbursement coverage does not generally have its own deductible. However, depending on the incident that made your car undrivable, the underlying collision or comprehensive coverage claim you filed may have a deductible. Check your policy documents or speak with an agent for details.

What does rental car reimbursement cover?

Rental car reimbursement coverage applies when your vehicle can’t be driven because of a covered loss. Covered scenarios may include:

• Collision with another vehicle: If you are involved in an accident, the damage is covered by insurance, and you need alternative transportation while your car is being repaired, rental car reimbursement coverage is likely to apply. 
• Theft: If your car is stolen, coverage may apply while authorities are investigating or a settlement is reached, subject to your policy limits.
• Vandalism: Damage caused by vandalism, such as broken windows or body damage, can trigger rental car reimbursement.
• Fire: If your car is inoperable because of a fire, you can typically use rental car reimbursement to help pay for alternative transportation.
• Weather-related damage: If a covered extreme weather event like a tornado damages your car, rental car reimbursement coverage is likely to apply.

What does rental car reimbursement not cover?

Rental car reimbursement is limited to specific, claim-related situations and does not apply for the following:

• Routine maintenance or mechanical breakdowns: Oil changes, tire replacement, engine trouble, or other non-accident-related repairs do not qualify for rental car reimbursement.
• Rentals for vacations or business trips: Rental car reimbursement does not apply for rental cars when you are traveling.
• Fuel and incidental rental costs: Even if the cost of the rental vehicle itself is covered, your policy will generally not cover gas, tolls, supplemental insurance purchased at the rental agency, or other secondary costs.

Who needs rental car reimbursement insurance?

Rental car reimbursement insurance may be worth considering if being without your car would disrupt your daily obligations or strain your finances.

This coverage can be especially helpful if:

• You only own one vehicle: If your car is in the shop after a covered claim and you need an alternative to get to work, run errands, or manage family obligations, rental car reimbursement can eliminate or reduce the cost of renting a vehicle in the meantime.
• You don’t have access to public transportation or rideshare: If you live in an area with limited or no public transportation, a rental car can be the best way to stay on the road while repairs are made.
• You don’t have the emergency funds for a rental: Rentals can cost hundreds of dollars over a week or two, and rental car reimbursement can cover all or some of those expenses so you don’t have to charge or borrow the funds.

How much does rental car reimbursement cost?

Rental car reimbursement is typically very affordable, often adding just a few dollars to your monthly car insurance premium. Pricing will depend partly on your daily reimbursement cap and total payout limit, with higher limits generally costing more. The best way to know what it will cost is to ask for personalized quotes from a few different insurers. Specify that you’d like pricing for full coverage in addition to pricing for full coverage plus rental car reimbursement. 

Rental car reimbursement vs. rental car insurance

Frequently asked questions

Is rental car reimbursement coverage the same as rental car insurance?

Rental car reimbursement coverage is not the same as rental car insurance. 

Rental car reimbursement helps pay for temporary transportation while your own vehicle is being repaired after a covered claim. It does not insure the rental vehicle itself. Rental car reimbursement is an optional coverage you can choose to add to your car insurance policy.

Rental car insurance, on the other hand, provides coverage against vehicle damage, theft, and liability while you are driving a car you rented. This kind of insurance can be purchased from a rental car agency or offered as a credit card benefit.

Does rental car reimbursement cover a total loss?

Yes, rental car reimbursement is likely to cover the cost of a rental (up to your policy limits) in the event your vehicle is totaled. Typically, coverage only applies until the insurer makes a settlement offer, rather than continuing until you purchase a replacement vehicle. 

What kind of car can I rent with rental car reimbursement coverage?

You can choose the type of rental vehicle you want, but your coverage is limited to the daily and total maximums outlined in your policy. If you choose a rental car that costs more than your limits, you’re responsible for paying the difference out-of-pocket. 

Will rental car reimbursement coverage pay for Uber or Lyft?

Many auto insurance policies allow rental car reimbursement coverage to be used for rideshare services, taxis, or public transportation. You will still need to abide by your daily and total maximums. Ask your agent or review policy documents to make sure this is the case with your own policy to avoid confusion or unexpected costs.