If you find yourself without a car because yours is getting repaired, rental reimbursement coverage could come to the rescue. But most policies have limits on how much they’ll pay, meaning that a lengthy repair process might max out your coverage.
How does rental reimbursement coverage work?
Rental reimbursement covers the cost of a rental car if your car is getting repaired at the garage after an accident. A few insurance companies also pay for alternative transportation like public transit or ridesharing instead of a rental car.
Rental car reimbursement applies when your car gets damaged for reasons covered under your collision or comprehensive coverage. However, all of these coverage types are optional. You’ll have to add at least comprehensive or collision, then rental reimbursement to your policy at an additional premium.
In some cases, you’ll choose a rental car, pay out of pocket for the cost and make a claim for reimbursement from your insurer. However, some rental car companies partner with insurers to get paid for the rental car directly.
3 qualifications to get your rental car reimbursed
For your insurer to pay for or reimburse you for a rental car, you’ll need to meet three criteria:
- Your auto insurance policy has rental reimbursement coverage. Check your policy or talk to your insurer if you don’t know whether you have this coverage.
- Your car was damaged in a covered incident. For example, if your car was damaged by hail but you don’t have comprehensive coverage, your insurer won’t pay for a rental.
- Your rental car costs are below your policy’s rental car limit. For example, if your policy covers up to $30 per day for a rental and you choose a car that costs $35 a day, you’ll need to pay the difference. And if your insurance only covers three days for a rental vehicle but you use it for four days, you’ll need to pay for the last day out of pocket.
How much rental reimbursement do I need?
Rental car reimbursement comes with a maximum amount that your insurance will pay for the rental car — for example, $30 or $50 per day for 30 days. If you’re looking to cover a rental car in full after an accident, you’ll need to research how much rentals cost in your area. Think through the type of car that you’ll need since compact cars typically cost the least, while large family cars keep a higher price tag.
As you look up costs, consider the expense of both daily and weekly rentals — even minor accidents can leave your car in the repair shop for several days. Then as a last step, talk with your insurance company about how their rental car reimbursement works. Some insurers partner with rental car companies to receive a lower rate when customers use that company after an accident.
What if my car is totaled or stolen?
If your car is totaled or stolen, you may have different limits for rental car reimbursement than you have for when your car is in the shop. Contact your insurer to find out if you’re covered for a rental car — and for how long.
When getting the rental, you’ll also want to check your current insurance to see if it covers driving a rental car. You may want extra insurance through the rental car company if you don’t have comprehensive or collision coverage through your own policy.
Is rental reimbursement worth the cost?
Yes, you could recoup the cost of rental reimbursement coverage easily if you get in an accident. Some policies add this option for as low as $4 per month or $48 per year.
The average time for repairs after an accident is two weeks, according to the Insurance Information Institute. If you paid a weekly rate of $210, the accident would set you back $420 total. At the above rate, it would take you over eight years of paying for the coverage to exceed its reimbursement amount after an accident.
You might consider adding rental car reimbursement in several situations, such as:
- You only own one vehicle.
- You don’t have access to a backup vehicle if yours needs repairs.
- Paying out of pocket to rent a car for several days or weeks would strain your finances.
- You couldn’t afford to pay for a rental car and make your next car loan payment.
- You want the convenience of getting a rental car through your insurance company after an accident.
Who doesn’t need rental reimbursement?
Skip this coverage if you don’t have a full coverage policy. The cost of rental reimbursement increases significantly if you don’t have comprehensive or collision coverage on your policy. Collision coverage can cost nearly $300 per year, and comprehensive coverage averages around $130. You’ll spend less paying for a rental car out of pocket in this case, unless you’re already upgrading to a full coverage policy.
What’s not covered?
Paying for this add-on for car insurance doesn’t mean you’ll get reimbursed every time you rent a car. It’s only for when you can’t use your car due to a covered event, like a car accident. And it won’t cover extras like gas.
Rental car reimbursement won’t pay for:
- Vacation rentals
- Business trip rentals
- Any other voluntary rentals
- Mileage costs
- Additional rental car insurance
- Rental amounts that go beyond your daily or maximum limits
Alternatives to rental reimbursement
If your car gets damaged in an accident and you didn’t buy this add-on, you can choose plenty of options for getting around. Those options include:
- Carpooling. You could hitch a ride with coworkers or friends if you need to get around for several days without your car. You can even find carpooling apps like Waze that let you share expenses with someone in your area. If you use a carpooling app, look for drivers with high ratings for safety’s sake.
- Catching a rideshare or taxi. Getting from A to B without your own car is easier and cheaper than ever using rideshare companies like Uber and Lyft. And you can always call a traditional taxi if you prefer that route.
- Public transportation. If you live in a city or suburb, you might have access to public buses and subways nearby. These options can be cheap, such as $2.50 per local ride or less.
- Paying for a rental out of pocket. Some rental car companies still give you a discount if you’re renting because of a car accident versus voluntary reasons. Try comparing low-cost car rentals like Enterprise or Budget.
Compare car insurance with rental reimbursement
Rental car reimbursement coverage can help keep you on the road while your car is out of commission. Even more, the add-on often costs much less than the average car rental total after an accident, helping you recoup your investment in this coverage. Find the best deal by comparing car insurance policies that offer this coverage.
Frequently asked questions about rental reimbursement coverage
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