What your policy actually covers
Most standard auto insurance policies do not automatically cover rental cars. You have to add rental reimbursement coverage as an optional add-on, and many people skip it because it costs extra. If you do not have it, your insurer will not pay for a rental while your car is in the shop — you pay out of pocket.
If you do have rental coverage, it typically pays a daily limit (often $30 to $75 per day, depending on what you chose when you bought the policy) toward the cost of renting a car. The coverage kicks in after your car is damaged in a covered event — a collision, theft, or weather damage — and lasts for a set number of days, usually 14 to 30.
The key word is "covered event." Rental reimbursement does not pay if your car breaks down from wear and tear, needs routine maintenance, or is damaged in a way your policy does not cover. It also does not cover rentals you choose for other reasons, like taking a trip while your car is fine.
Key Takeaways
- Rental reimbursement is an optional add-on to your policy, not automatic, and you need to have purchased it before you need it.
- If you have the coverage, it pays a daily amount (your chosen limit) toward rental costs for a set number of days after a covered loss.
- The coverage only applies after your car is damaged in an event your policy covers, such as a collision or theft.
- Your insurer will not pay for a rental if your car is in the shop for mechanical failure, routine maintenance, or a type of damage your policy excludes.
- Check your policy documents or call your agent to find out whether you have this coverage and what your daily limit and maximum days are.
How the coverage works when you need it
Once your car is damaged and you file a claim, you can rent a car and submit the receipt to your insurer. They will reimburse you up to your daily limit for each day the rental is necessary — usually from the day of the loss until your car is repaired or deemed a total loss.
Some insurers will pay the rental company directly if you arrange it in advance and give them the rental agreement. Others require you to pay upfront and submit the receipt later. Ask your claims adjuster which method your insurer uses; it saves you from fronting money you might not get back if there is a dispute over how many days the rental was necessary.
The coverage stops once your car is ready to drive, even if you have days left on the rental agreement. If the repair takes longer than your policy's maximum number of days, you are responsible for any rental costs beyond that point.
What rental reimbursement does not cover
Rental reimbursement only pays for a standard rental car — a basic sedan or compact vehicle. If you rent a luxury car, an SUV, or a specialty vehicle and it costs more than your daily limit, you pay the difference. The coverage also does not include insurance on the rental car itself, fuel, tolls, parking fees, or damage you cause to the rental.
If your car is damaged but you choose not to repair it or you decide to keep driving it as-is, rental reimbursement does not apply. The coverage is tied to the repair process, not to your choice to avoid driving your damaged car.
Rental reimbursement also does not cover a rental you arrange while your car is in the shop for a mechanical breakdown, a recall repair, or routine maintenance like an oil change or tire replacement. It only applies to damage from a covered loss — collision, comprehensive (theft, weather, vandalism), or uninsured motorist, depending on which coverages you have.
How much coverage you need
The daily limit you choose when you add rental reimbursement should reflect what a basic rental car costs in your area. In most places, a standard rental runs $35 to $60 per day, so a $50 daily limit covers most of the cost. If you live in a high-cost area or near an airport, rentals may run higher, and a $75 limit might make sense.
The maximum number of days is equally important. A typical repair takes 5 to 14 days; major repairs or those requiring parts to be ordered can take 30 days or longer. If you choose a 14-day maximum and the repair takes 21 days, you cover the last week yourself. Many people choose 30 days to avoid that gap, though it costs a bit more in premium.
If you have a long commute or depend on your car for work, a longer maximum and a higher daily limit are worth the extra cost. If you have a second vehicle or can borrow one, a lower limit or shorter maximum saves you money on premium.
Checking your current policy
Your policy documents list every coverage you have, including rental reimbursement if you purchased it. Look for a section called "Additional Coverages," "Optional Coverages," or "Endorsements." The rental reimbursement line will show your daily limit and maximum number of days.
If you cannot find it in your documents, call your agent or log into your insurer's website and pull up your policy. Most insurers let you view and download your full policy online. If you do not see rental reimbursement listed, you do not have it, and you would need to add it if you want that protection going forward.
Keep in mind that adding coverage now does not cover a loss that already happened. If your car is already in the shop, it is too late to add rental reimbursement for that repair. Coverage changes take effect on the date you request them, not retroactively.
Adding rental reimbursement to your policy
Contact your insurance agent or your insurer's customer service line and ask to add rental reimbursement coverage. You will choose a daily limit and a maximum number of days, and your premium will increase by a small amount — usually $10 to $25 per year, depending on the limits you select and your insurer.
The change takes effect immediately or on the date you request, depending on your insurer's process. Once it is active, you are covered for any future loss that qualifies. If your car is damaged, file a claim as you normally would and mention that you need a rental car; your claims adjuster will walk you through the reimbursement process.
When rental coverage is not enough
Rental reimbursement covers the rental cost, but not all the costs of being without your car. If you need a rental for longer than your policy allows, or if the daily limit does not cover the full rental cost, you have a few options.
Some repair shops offer loaner cars while your vehicle is being fixed, at no charge or for a small fee. Ask your repair facility whether they have loaners available before you arrange a rental. If your car is being repaired under warranty or through your insurer's preferred repair network, a loaner may be included.
If you need a rental beyond what your policy covers, you can pay out of pocket or negotiate with the rental company for a lower rate. Some rental agencies offer discounts for insurance claims or long-term rentals, so it is worth asking.
Frequently Asked Questions
Does rental reimbursement cover a rental car if my car breaks down?
No. Rental reimbursement only covers rentals after your car is damaged in a covered loss — collision, theft, weather, or vandalism. Mechanical breakdown is not a covered loss under standard auto insurance, so rental reimbursement does not apply. You would need to pay for a rental out of pocket or have a separate breakdown coverage policy.
What if the rental car costs more than my daily limit?
You pay the difference. If your daily limit is $50 and the rental costs $75, your insurer pays $50 and you pay $25. This is why it is important to choose a daily limit that matches rental prices in your area when you add the coverage.
Can I rent a luxury car and have my insurance cover it?
Your insurance will pay up to your daily limit, regardless of what car you rent. If you rent a luxury car that costs $150 per day and your limit is $50, your insurer pays $50 and you pay $100. Most people rent a basic car to stay within their limit and avoid out-of-pocket costs.
Does rental reimbursement cover the insurance on the rental car?
No. Rental reimbursement covers only the rental cost itself. You are responsible for the rental car's insurance, which the rental company will offer you at checkout. Your personal auto insurance does not extend to a rental car you are driving, so you need to purchase the rental company's coverage or decline it if your credit card or personal policy covers rentals.
What happens if my car is totaled — do I still get rental coverage?
Yes, but only for a limited time. If your car is declared a total loss, rental reimbursement typically covers rentals for 14 to 30 days (depending on your policy) while you settle the claim and arrange to buy a replacement. Once the claim is settled, the rental coverage ends.