Key Takeaways
- Rental reimbursement is a separate coverage you must add to your policy; it does not come automatically with collision or comprehensive coverage.
- Your policy limits how much the insurer will pay per day for a rental — typically $30 to $75 — and for how many days total, usually 10 to 30 days.
- You must have a covered claim (collision, comprehensive, or sometimes theft) for rental coverage to activate; it does not cover wear and tear or mechanical breakdown.
- Your liability coverage still applies when you drive a rental, so you remain protected if you cause an accident.
- Some credit cards and rental companies offer their own rental coverage, which may overlap with your policy.
How Rental Reimbursement Coverage Works
Rental reimbursement coverage reimburses you for the cost of renting a car while yours is being repaired after a covered loss. The insurer pays the rental company directly or reimburses you after you submit a receipt, depending on your policy and the rental company's agreement with your insurer.
The coverage only activates when you have a valid claim — typically a collision, comprehensive loss (theft, weather, vandalism), or sometimes a comprehensive loss from your own insurer. If your car breaks down because of mechanical failure or normal wear, rental coverage does not apply because there is no covered claim.
Your policy sets a daily limit (the amount paid per day) and a total limit (the maximum number of days covered). If you rent a car at $60 per day but your policy covers only $40 per day, you pay the $20 difference. If your repair takes 20 days but your policy covers only 14 days, you pay for the remaining 6 days yourself.
What You Need to Do to Use Rental Coverage
Report your claim to your insurer as soon as possible after the loss occurs. Tell them you need a rental car while yours is being repaired. Your insurer will either direct you to a rental company they work with or tell you which rental companies they will reimburse.
If you use a rental company your insurer has an agreement with, the company may bill your insurer directly, and you pay only your deductible and any overage (the amount above your daily limit). If you use a different rental company, you typically pay the full bill upfront and submit the receipt to your insurer for reimbursement.
Keep all receipts, the rental agreement, and proof of the repair timeline. Your insurer may ask for documentation showing how long the repair actually took, especially if it exceeds your policy's daily limit.
Daily Limits and Time Limits Explained
A daily limit is the maximum amount your insurer will pay for one day of rental. Common daily limits are $30, $40, $50, $60, or $75, though some policies offer higher limits. If you rent a luxury car or a larger vehicle that costs more than your daily limit, you cover the extra cost.
A time limit is the total number of days your insurer will pay for. Most policies cover 10, 14, 21, or 30 days. If your repair takes longer, you pay for the additional days. Some policies tie the time limit to the repair timeline — for example, they cover rentals only while the repair shop has your car, not during waiting periods.
The total benefit is the daily limit multiplied by the number of days covered. A policy with a $50 daily limit and 14 days of coverage pays up to $700 in rental costs. If your repair takes 20 days at $60 per day, your insurer pays $700 (14 days × $50), and you pay $1,500 for the remaining 6 days.
When Rental Coverage Does Not Apply
Rental reimbursement does not cover mechanical breakdown, engine failure, transmission problems, or other failures that result from normal wear and tear. Your car must have been damaged by a covered peril — collision, theft, weather, vandalism, or another event your policy covers.
If you cause an accident and your collision deductible applies, your rental coverage still works, but you pay your deductible first. Some policies require you to use a rental company your insurer has approved; if you choose a different company, reimbursement may be denied or reduced.
Rental coverage also does not extend to personal use. If you rent a car for a vacation while your car is in the shop, your policy covers only the rental needed during the actual repair period, not extra days for leisure.
Credit Cards and Rental Company Coverage
Some credit cards offer rental car coverage if you charge the rental to that card. This coverage is usually secondary, meaning it pays only after your auto insurance coverage is exhausted. Check your credit card's benefits guide to see what rental coverage it includes and whether it applies to damage, liability, or both.
Rental companies also offer their own damage waiver and liability coverage at the counter. If you already have rental reimbursement through your auto policy and credit card coverage, you may not need the rental company's coverage — but read the terms carefully, because coverage can overlap or conflict.
If you do not have rental reimbursement on your auto policy, credit card coverage or rental company coverage becomes more important. However, credit card coverage often has lower limits and may not cover liability, so it is not a complete substitute for rental reimbursement coverage on your policy.
Adding or Increasing Rental Coverage to Your Policy
Contact your insurance agent or log into your policy online to add rental reimbursement coverage or increase your daily or time limits. The cost is usually modest — often $5 to $15 per month depending on your daily limit and location — because claims are typically short-term.
When you request a change, your agent will ask you what daily limit and time limit you want. Consider how long repairs typically take in your area and what rental cars cost. If you live in an expensive market or drive a car that takes longer to repair, a higher daily limit and longer time limit are worth the small additional premium.
The coverage takes effect on the date your insurer approves it, so add it before you need it. If you wait until after an accident, the coverage will not apply to that claim.
Liability Coverage in a Rental Car
Your liability coverage — the part of your policy that pays for injuries or damage you cause to others — applies when you drive a rental car, as long as the rental is temporary and related to a covered claim. You are protected if you cause an accident while driving the rental.
Your liability limits on your auto policy apply to the rental car. If you have $100,000 in liability coverage, that limit protects you in the rental just as it does in your own car. You do not need to buy the rental company's liability coverage if your auto policy already covers you.
However, some rental companies require you to buy their liability coverage or decline it in writing. Read the rental agreement carefully and confirm what coverage you already have before you sign.
Frequently Asked Questions
What if my repair takes longer than my policy covers?
You pay for the rental days that exceed your policy's time limit out of pocket. Contact your repair shop and your insurer to confirm the expected repair timeline before it happens. Some insurers will extend coverage in cases of unavoidable delays, so ask.
Does rental coverage apply if I cause the accident?
Yes, as long as you have collision coverage. Rental reimbursement activates whenever you have a covered claim, regardless of who caused the accident. You pay your collision deductible, and then rental coverage applies to the rental cost.
Can I rent a luxury car and have my insurance pay for it?
Your insurer pays only up to your daily limit. If you rent a car that costs more than that limit, you pay the difference. Some policies limit rentals to vehicles similar in class to your own car, so check your policy language.
Do I need rental coverage if I have a credit card that covers rentals?
Credit card coverage is usually secondary and may have lower limits. If you do not have rental reimbursement on your auto policy, credit card coverage is better than nothing, but it is not a complete substitute. Adding rental coverage to your policy is inexpensive and provides primary protection.
What happens if I do not have rental reimbursement coverage?
You pay the rental company directly out of pocket. Your liability coverage still protects you if you cause an accident in the rental, but you have no reimbursement for the rental cost itself. Adding this coverage to your policy is usually cheaper than paying for even one week of rentals.