Will Insurance Pay for a Rental Car During Repairs?

It’s common to wait until you need a rental car to ask yourself, “Does my car insurance cover rental cars?” Most auto insurance companies list this coverage as “rental car reimbursement” or similar. You are not required to use your rental car reimbursement coverage, but it is a nice perk if and when needed. 

If you have the appropriate coverage selected and you have an open claim, your insurance  can help cover the cost of your rental car typically. Car insurance companies award rental car coverage regardless of who’s determined to be at fault in the accident if that’s the cause for the filed claim. 

Auto insurance policies that include rental car reimbursement coverage are often subject to limitations. You cannot use this type of rental coverage in all situations. In addition, your coverage may only absorb some of the costs associated with obtaining a rental car through your car insurance policy. With FINN, for example, subscribers are permitted to submit a request for reimbursement of up to $40 a day for up to 20 days ($800 cap).

When does car insurance not cover rental costs?

You must have rental reimbursement coverage as part of your insurance policy for the insurance company to cover the cost of your rental. If you do not have this specific coverage selected, you are responsible for any costs incurred by renting a car while your car is in the shop. These statements apply when an active insurance claim is in process, regardless of who was determined to be at fault in the case of an accident. 

Rental car reimbursement does not cover the following: 

• A car rented for a business trip
• Vacation car rentals
• Obtaining a rental due to breakdowns or mechanical failures of your primary vehicle 
• Routine maintenance or basic repairs

You are still responsible for paying for gas and your insurance premium while renting a car covered by rental car reimbursement policies. 

Rental car reimbursement does not apply when your car is in the shop and covered under warranty or mechanical breakdown insurance. If the dealership determines that your factory or extended warranty covers repairs, they may provide rental car coverage separate from your auto insurance. Again, it depends on what conditions your policy stipulates under covered circumstances. 

Determining your rental reimbursement coverage begins with your declarations page. You can also ask your auto insurance representative directly what your policy includes. They should be able to direct you to the specific section of your policy that describes: 

• Approved car repair partners (if applicable) 
• Car rental network partners (if applicable) 
• Daily limits
• Coverage length 
• Any other specifics

Auto insurance companies typically require an open claim to obtain rental car reimbursement, so if you don’t have a claim currently open, you cannot have your insurance company reimburse you for rental car costs. Most insurance companies also don’t allow you to add rental car reimbursement right after an accident. 

To use rental car reimbursement coverage, you must file an insurance claim. It’s best to ask your auto insurance representative where and how to obtain a rental car, given what your policy allows. Confirm your coverage before you pick up your rental car. It’s also a good idea to stay in touch with your insurance representative for updates on repairs and coverage, especially as you near your policy limits. 

Most rental car coverage policies stipulate coverage length and daily limits. Rental car insurance typically lasts from 14 to 30 days. Depending on the situation, your insurance company may extend coverage for a few extra days to match up with the release of your primary car from the shop. However, you should ask about extended coverage if repairs may last longer than your policy allows. 

In addition, daily limits will determine which types of cars you can rent. If your daily limit is $40, but you choose a car priced at $50 daily, you’re responsible for the additional $10 in rental costs daily. However, if you choose a car that rents for $30 daily, you don’t necessarily earn a $10 credit. 

Rental car coverage may also limit you to specific rental car companies. You're liable for the costs upfront if you work with a company outside that network. Your insurance company will reimburse you after the fact, but only to the specific limits stated in the policy. 

Most rental car companies attempt to rent you a car that best matches your primary vehicle. For example, if you drive an SUV such as the Volkswagen ID.4, they may pair you with a Chevrolet Blazer or a Jeep Grand Cherokee. Sometimes, however, your policy limits and the daily rental price of the comparable car don’t match up. You are responsible for the difference if your coverage only allows for $40 rental rates, but similar rental vehicles cost $60 and up. 

Opting for a higher coverage limit regarding daily costs or rental period length can help cover your rental expenses. However, this additional coverage may increase your premium, so consider the trade-off before you up your policy limits. 

Rental reimbursement policies cover the cost of a rental car while your car is in the shop being repaired. Depending on policy specifics, this auto insurance coverage may also apply to bus or cab fares or rideshare costs. Most insurance companies offer rental reimbursement as a rider included in the full coverage (comprehensive and collision) package. 

Most states don't require full coverage and rental reimbursement as minimal coverage. However, leased and financed cars may require full coverage that comes with rental reimbursement per their respective agreements. If the auto insurance company requires a deductible, it’s typically as part of the policy in full or your full coverage deductible rather than an individual deductible for rental reimbursement specifically. 

Rental car reimbursement vs. rental car replacement coverage 

Understanding the difference between rental car reimbursement and replacement coverage is critical. With rental car reimbursement, your insurance policy reimburses you for renting a car while your own is in the shop after an accident. Rental car reimbursement requires an active claim and covers your primary vehicle(s) on your insurance policy. 

However, rental car replacement coverage protects you if your rental car sustains damage. It’s similar to the insurance policy you pay a monthly premium on, except that it covers your rental car and not your primary mode of transportation. You can obtain rental car replacement coverage from your auto insurance provider, or you may have additional coverage offered as a perk by your credit card company or bank.   

What does comprehensive insurance cover?

Comprehensive insurance covers loss or damage due to an event where a vehicle was not necessarily involved. Many comprehensive insurance claims stem from the following:

• Theft
• Flood damage
• A tree falling on your car
• Hail damage

Full coverage includes comprehensive and collision coverage. Compared to comprehensive, collision covers incidents where you hit another vehicle or vice versa. 

Many people find rental reimbursement coverage nice to have, especially if you don’t own another vehicle. Adding rental reimbursement coverage is relatively inexpensive, and much like car insurance, it’s best to have it when you need it rather than be without it. Like your right to pause your car insurance if you’re not driving, you can keep rental car reimbursement off your insurance policy to save money. However, paying a few extra dollars every month can cost you less than paying for rental car costs out of pocket.