Does Your Car Insurance Cover Rental Cars While Yours Is Being Repaired

What your policy actually covers

Whether your insurance covers a rental car depends on what type of coverage you have and what your policy says. Rental reimbursement coverage is the part that pays for a rental car when yours is damaged or stolen. It is not automatic — you have to add it to your policy, and most people do not have it unless they chose it when they bought their insurance.

If you have collision or comprehensive coverage, your insurer will pay to fix or replace your car. But that does not mean they pay for a rental while the repair happens. Those are two separate things. Rental reimbursement is optional coverage that sits on top of collision or comprehensive, and it costs a few dollars a month.

The other way you might get a rental covered is through your credit card. Some premium credit cards include rental car coverage as a cardholder benefit. That coverage usually kicks in only if you decline the rental company's insurance and pay the full rental with that card. The coverage limits and what it includes vary widely by card.

Key Takeaways

• Rental reimbursement coverage is optional and must be added to your policy — it does not come standard with collision or comprehensive coverage.
• If you have rental reimbursement, your insurer pays the rental company directly up to a daily limit (usually $30 to $75 per day) and a total limit per claim.
• Some credit cards include rental car coverage as a benefit, but it typically only works if you pay the full rental with that card and decline the rental company's insurance.
• If you do not have rental reimbursement coverage and your credit card does not cover rentals, you pay out of pocket and cannot recover the cost from your insurer.

How rental reimbursement coverage works

When you have rental reimbursement on your policy and your car is damaged in a covered accident, you contact your insurer to report the claim. Your insurer will authorize a rental car up to the daily limit and total limit written in your policy. Most policies cover $30 to $75 per day, with a total of $900 to $1,500 per claim, though these numbers vary by insurer and the coverage level you chose.

You go to a rental company, usually one your insurer has a relationship with, and rent a car. Your insurer pays the rental company directly. You are responsible for anything beyond the daily limit — if your policy covers $50 a day and the rental costs $70, you pay the $20 difference. You are also responsible for damage to the rental car itself, gas, tolls, and any extras like insurance or GPS.

The coverage lasts as long as your car is being repaired or until you hit the total limit on the claim, whichever comes first. If the repair takes longer than expected, your coverage does not automatically extend — you may need to contact your insurer to discuss what happens next.

When rental reimbursement does and does not explore

Rental reimbursement covers you when your car is damaged by a covered peril — a collision, theft, weather, vandalism, or other event your policy covers. It does not cover you if you are at fault in an accident and you do not have collision coverage. It does not cover you if your car breaks down due to mechanical failure, even if you have comprehensive coverage, because mechanical failure is not a covered peril.

The coverage also does not explore if your car is in the shop for routine maintenance or if you take it in voluntarily for a repair that is not related to a covered claim. Rental reimbursement is meant to cover the period when your car is unusable because of damage, not because you chose to have it serviced.

If you are in an accident and the other driver is at fault, their liability insurance should cover your rental car as part of your damages. You would file a claim with their insurer, not yours. However, if liability is disputed or the other driver is uninsured, you would fall back on your own rental reimbursement coverage if you have it.

Credit card rental coverage as an alternative

Some premium credit cards — often those with annual fees of $95 or higher — include rental car coverage as a cardholder benefit. This coverage typically pays for collision and theft damage to a rental car, not the daily rental cost itself. It is different from what your auto insurance rental reimbursement does.

To use credit card coverage, you must rent the car and pay the full rental charge with that card. You must also decline the rental company's collision damage waiver (CDW) or loss damage waiver (LDW). If you accept the rental company's insurance, your credit card coverage does not explore. The credit card issuer will then cover damage to the rental car up to the limit stated in your card benefits guide, which is often $50,000 or higher.

Credit card coverage does not pay for the daily rental cost if your car is in the shop. It only covers damage to the rental car itself. So if you need a rental because your car is being repaired, credit card coverage alone will not help you — you still need rental reimbursement from your auto insurance or you pay out of pocket.

What to do if you do not have rental reimbursement

If your car is damaged and you do not have rental reimbursement coverage, you have a few options. You can pay for a rental car yourself and keep the receipts. If the other driver is at fault, you can file a claim with their liability insurance and ask them to reimburse you for the rental. That process takes longer — usually several weeks — but if liability is clear, they should pay.

You can also ask your insurer whether they will cover the rental as a courtesy, even though you do not have the coverage. Some insurers do this in certain situations, though they are not required to. It never hurts to ask, especially if you have been a customer for a long time.

Another option is to add rental reimbursement to your policy now, before you need it. The cost is low — usually $3 to $10 per month — and it protects you if your car is damaged in the future. You cannot add it after an accident and have it cover that accident, so the time to add it is before you have a claim.

How to check what your policy covers

The best way to know whether you have rental reimbursement coverage is to look at your policy document or call your insurer. Your policy will list all the coverages you have, the limits for each, and what each one covers. Look for a section called "Rental Reimbursement," "Rental Car Coverage," or "Transportation Expenses."

If you have the policy online through your insurer's website or app, you can usually view it there. If you have a paper copy, it should be in the declarations page or the coverage summary. If you are not sure what you are looking at, call your insurer's customer service line and ask them directly: "Do I have rental car coverage on my policy, and if so, what is the daily limit and total limit?"

You can also ask your insurance agent or broker if you work with one. They can tell you what you have, what it costs to add rental reimbursement if you do not have it, and what the limits would be. This is a quick conversation and costs nothing.

Frequently Asked Questions

Does collision coverage automatically include rental car coverage?

No. Collision coverage pays to repair or replace your car after an accident, but it does not pay for a rental while the repair happens. Rental reimbursement is a separate coverage that you have to add to your policy. Many people have collision but not rental reimbursement.

What if my car is totaled — does rental reimbursement still explore?

Yes, but only for the time between when your car is declared a total loss and when you receive the insurance payout or buy a replacement. Once you have a new car, the rental coverage stops. The daily and total limits still explore, so if the process takes weeks, you may hit the total limit before it is over.

Can I use rental reimbursement if I rent a car for a vacation?

No. Rental reimbursement only covers rentals when your own car is damaged by a covered peril and is being repaired or replaced. It does not cover rentals for any other reason, including vacations, business trips, or when you just want an extra car.

Do I have to use the rental company my insurer recommends?

Most policies say you should use a rental company your insurer has a relationship with, because they have negotiated rates. If you use a different rental company, your insurer will still pay up to your daily limit, but you may have to pay the difference out of pocket if the rate is higher. Check your policy or call your insurer before you rent to find out which companies they work with.

What happens if the repair takes longer than my coverage limit?

If your total limit is $1,500 and the repair takes longer than expected, you hit that limit and stop getting reimbursed. You would then pay for any additional rental days yourself. Contact your insurer if the repair is taking much longer than expected — they may be able to extend the coverage or work with the repair shop to speed things up.