What Is Rental Reimbursement Coverage?

We heavily rely on our cars for everyday commutes, getting us to work, school, and everywhere in between. No one can deny they might need their vehicle at any time of the day. But unfortunately, where there is a car, there's a risk of an accident. So, if an accident occurs and your car ends up in the repair shop, you still need a way to get around. In such a case, you might have to use public transportation or a rental car. One is not always available, and the other, of course, can be costly. Fortunately, if you have rental car reimbursement coverage, you have nothing to worry about. It covers a temporary ride while your car is being fixed under a covered insurance policy. 

What Is Rental Car Reimbursement Coverage?

Rental reimbursement coverage is an optional auto insurance add-on that you can easily add to your existing policy if you already have comprehensive and collision insurance (depending on availability).

It pays to rent a temporary vehicle while your car is being repaired after a covered accident. This coverage is not about luxury. It is about providing the convenience that helps you stay on the road when your vehicle is undrivable after a crash.

For example, if you get into a fender bender and your car insurance covers the damage and sends your vehicle to an auto body repair shop, this coverage steps in to pay for your temporary transportation. You rent a car, drive as usual, and your insurance reimburses you for the cost up to your policy's daily and total limits.

As one of the most trusted insurance companies in MI, USA Auto ensures every driver in the Great Lakes State drives safely and confidently. To reduce the hassle on and off the road, we offer reliable and affordable auto insurance coverage for everyone, including high-risk drivers. Call us now (866) 855-1872 or request an auto insurance quote online. If you need to talk to our expert regarding rental reimbursement coverage, you can also find an agent here. 

How Does Rental Car Reimbursement Coverage Work?

When you file a covered accident claim under your auto insurance policy, rental car reimbursement coverage can step in first (if you have one). 

First, your insurer verifies the loss and confirms repairs. Then you rent a car within your policy limits, and the insurer either pays the rental company directly or reimburses you after you submit your receipts.

You’ll be covered up to the daily limit and total cap, for example $40/day up to 30 days. It won’t kick in for regular maintenance or breakdowns. And if another driver is at fault, their insurance may pick up the tab instead.

What Does Car Rental Reimbursement Cover?

Rental car reimbursement insurance pays the amount to rent a vehicle or the cost of public transportation when:

• Your car has been stolen  Your car has been vandalized 
• Has a collision with another vehicle 
• Crashes into another stationary object   
  

Please note that this coverage reimburses for approved transport alternatives, like taxis or rideshares, if rentals aren’t available. And there are daily and total limits that define how much your insurance policy will pay.

What Is Not Covered by Rental Reimbursement Coverage?

Car rental reimbursement coverage usually does not include:

• Fuel costs/gas refills during your rental period 
• Security deposits or additional rental company fees 
• Upgrades to luxury or premium vehicles 
• Costs of a rental car while your vehicle gets routine maintenance 
• Car rental costs during mechanical breakdown, or wear and tear 
• Any charges that surpass your daily or total limits   
  

Pro Tip: A recent study reveals that nearly 60% of eligible policyholders lack rental reimbursement coverage, yet about half of them still end up renting a car when they file a claim. It often costs more out of pocket and extra hassle. So, it’s far smarter to add this coverage before your vehicle gets damaged from an unexpected incident.

What Kind of Car Can You Rent Under This Coverage?

You can usually rent a standard vehicle similar to the one you drive using the rental car reimbursement coverage. The insurance policy won’t cover any luxury or high-end models unless that’s what you normally own.

It is worth noting that most auto insurance companies set daily and total cost limits. So, the type of car depends on those limits. For example, if your insurer pays you $40 per day, you’ll likely get a compact or midsize car. However, if you need something larger, you can upgrade and pay the difference out of pocket.

What Are the Limits of Rental Car Reimbursement Coverage?

Rental reimbursement coverage comes with limits. These limits decide how much your insurance policy will pay each day and in total. Most auto insurance plans set a daily cap (like $30 to $50 per day) and an overall cap (for example, up to $900 total). Once you exceed those numbers, you’ll pay the extra cost, breaking your bank. 

Of note, limits vary by insurer, your vehicle type, and your state’s rules. So, talk to your auto insurance provider if you have any queries regarding limits/total cap.

How Long Will I Need a Rental Car After an Accident?

How long you’ll need a rental car depends on how long it takes to fix your vehicle.  Repairs can be delayed by insurance approval, how bad the damage is, whether parts are available, and the body shop’s schedule. Most people need a rental for 1 to 2 weeks, but serious damage can take longer. Insurance usually pays for the rental only for the time it reasonably takes to complete repairs.

Pro Tip: Your rental reimbursement insurance lasts only as long as your covered repairs do.

How Long Does Insurance Pay for My Rental Vehicle After an Accident? 

Your insurance policy pays for your rental car only while your damaged vehicle is being repaired. This coverage period ends once the repairs are complete or your claim is settled. As we said before, most rental reimbursement coverage plans include both a daily and total cap. For instance, many insurers pay roughly from $30 to $60 for up to 30 days.

Keep in mind, rental coverage depends on your vehicle’s repair status:

• If repairs finish early, rental coverage ends immediately. 
• If repairs take longer than expected and exceed your coverage limits, you’ll pay the extra cost yourself. 
• If your car is declared a total loss, rental coverage lasts only until your insurance claim is settled.

Who Pays for a Rental Car After an Accident?

Whether your insurer or the other driver’s insurance company pays for your rental car depends on who is responsible for the accident. For example, if you caused the accident, you’re considered at fault.

In that case, your insurer will cover the rental car reimbursement. However, if you’re the victim and the other driver is at fault, their insurance will pay for the coverage.

If the fault is unclear after the accident, you’ll need to use your own insurance for rental car benefits. Once the fault is established and the other driver is found at fault, their insurance company will reimburse you for the rental vehicle.

Pro Tip: Keep all receipts and documentation in case you need to seek reimbursement later.

How Much Does Rental Car Reimbursement Coverage Cost? 

Rental car insurance coverage can add between $2 and $15 to your existing auto insurance policy. This rate may vary depending on your insurance provider, vehicle type, policy limits, and other factors.

Regardless of the cost, it’s usually wise to purchase this coverage. If your vehicle is under repair and you don’t have an alternative, renting a car can cost over $70 per day. It means if you rent it for a week, you’ll end up paying $840. That’s wildly expensive!

In contrast, rental car reimbursement insurance typically costs no more than $120 per year. Since most vehicles end up in a repair shop at least once a year, adding this coverage is surely an affordable and cost-effective solution.

Do I Have to Pay a Deductible for Rental Car Reimbursement Coverage?

The good news is you don’t need to pay the deductible for rental auto reimbursement coverage. Since this is an add-on to your existing policy, it’ll simply kick in when your primary insurance claim, like collision or comprehensive claim is approved. However, you still have to pay the deductible tied to that primary claim before your vehicle repairs begin.

Let’s say you crash into another vehicle on a busy road, so you file a claim under collision insurance coverage. You’d pay your collision insurance deductible for the repair, and your rental reimbursement coverage would cover the cost of your temporary rental without adding another deductible.

How to Buy Rental Reimbursement Coverage?

It's easy. Just talk to your current insurance company or agent. They can guide you in the right direction. Remember, in most cases, you’ll need to have a collision and comprehensive insurance policy to become eligible for this additional coverage. If you have already purchased those coverages, you can add this at any time.

The best time to purchase it while you buy a new policy or renew it. It’s super affordable, just a few extra dollars per month. So, you should buy it if you use your vehicle daily and don’t have backup transport options. If you’re one of the USA Auto policyholders, check with our insurance agent to find out whether you’re eligible for it or not.

Is Rental Car Reimbursement Coverage Worth It?

Absolutely. It’s worth it for most drivers who don’t have backup transportation. Here are a few reasons why it is value for money coverage for many drivers out there:

• It’s super affordable. 
• It saves you money because renting a car is costly. 
• It keeps you mobile and out of trouble after an accident. 
• It’s customer-friendly and easy to use. 
• And lastly, it offers complete peace of mind

Rental Reimbursement Insurance Coverage FAQs

What counts as a covered loss for rental reimbursement?  

A covered loss usually means damage from a collision, theft, fire, natural disasters, animal collision, and other events included in your auto insurance policy. However, routine wear or mechanical breakdowns don’t count.

Is rental reimbursement coverage required?

No. It’s optional. However, if you drive your vehicle regularly and don’t have a backup car, you should definitely carry it to save money and avoid the hassle of renting a vehicle.

Who pays for rental reimbursement if you are not at fault? 

If the other driver causes the accident, then their liability insurance should cover your rental car. If their insurance delays payment, your own rental reimbursement coverage can help first, and your insurance company may recover the cost later.

Will my insurance pay for a rental car if my car breaks down?

No. It’s only applicable to the covered events that we mentioned earlier. Mechanical breakdowns and regular wear and tear are excluded. So, you won’t be covered.

Will insurance pay for a rental car during repairs? 

Yes. As we said, if the repairs are from a covered accident or event, your insurance will pay up to the daily and total policy limits. 

How much coverage do I need?

It depends on your needs, rental rates in your area. Most drivers choose limits like $30 to $60 per day with $900 to $1,500 total cap. So, choose your limit that matches the average rental cost where you live. 

Is rental reimbursement part of full coverage insurance?

Not Automatically. “Full coverage” includes liability, collision, and comprehensive insurance, but rental reimbursement is an add-on. You’ll need to request it separately when you set up your auto insurance policy.