Do You Need Rental Reimbursement Coverage?

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Rental reimbursement: woman opening the door of a car

According to the most recent data from the National Safety Council, 34.8 million people were injured in automobile accidents in the U.S. in 2020. Many of these accidents forced drivers to seek alternative transportation, including turning to rental car companies for a rental vehicle.

Luckily, drivers can mitigate the cost of a rental car while their own vehicle is at the body shop by electing to get optional coverage known as rental car reimbursement coverage.

This guide will serve as an FAQ about rental reimbursement coverage, including how this additional coverage works, what is covered and what is not, and estimated savings versus paying out of pocket.

If you are ready to add this option to your car insurance coverage, it’s a good idea to compare quotes from top-rated auto insurance companies to find the best rental reimbursement policies for you. To get started, enter your ZIP code below:

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What is Rental Reimbursement Coverage?

Also referred to as rental car or transportation expense coverage, rental reimbursement coverage helps cover the cost of vehicle rentals in case your vehicle was out of commission due to a covered loss. In addition, it pays for alternate transportation, such as a car service, public transport, and Uber or Lyft.

Keep reading to learn more about rental reimbursement coverage, including what it covers, what it does not cover, and if it is worth adding to your policy.

How Does Rental Reimbursement Coverage Work?

Rental reimbursement: driver doing the thumbs up

Rental reimbursement coverage is straightforward to understand.

Once your vehicle goes to the repair shop due to one of three covered losses (collision with a stationary object, car, and wildlife), your auto insurance company will reimburse the daily rental rate. You may decide to pay for the rental vehicle out-of-pocket and submit an invoice to your insurance provider for reimbursement.

Alternatively, your auto insurance provider can arrange any vehicle rental, including all paperwork and direct payment to a partner rental agency. Not all insurance providers work with all rental agencies, so be sure to inquire with your insurance agent beforehand.

It’s good practice to use your insurance provider’s rental agency. An established relationship and no need to submit additional expense claims make the process easier than working directly with the rental company.

What Does Rental Reimbursement Cover?

Rental reimbursement provides rental vehicles to policyholders after covered losses — vehicle, stationary object, and wildlife collisions.

Policyholders can use rental car reimbursement coverage limits to pay for rental vehicles or alternative forms of transportation, such as public buses, trains, and ride-sharing services.

Typical rental reimbursement policies usually allow for basic economy vehicles, not luxury or seven-seaters like the Ford Explorer or the Tesla Model X. Be sure to review all of your rental reimbursement coverage options (including deductible and liability provisions) with your auto insurance provider. Some may be willing to provide a larger vehicle for a modest price increase.

What Doesn’t Rental Reimbursement Cover?

Rental reimbursement insurance coverage does not include transportation expenses such as gas, road trip fare, and security deposits incurred after a car accident. It also does not cover routine maintenance such as oil changes and tire rotations.

It only covers first-party repairs after an accident covered by your auto insurance policy. It is not included as a warranty program and does not cover routine maintenance. Your vehicle must become damaged or part of a total loss to be eligible for rental reimbursement.

By default, each vehicle has its rental reimbursement policy, not a single policy for all vehicles under a policy. Your rental reimbursement policy must be active before the accident takes effect, not during or after.

What Provisions Do Rental Reimbursement Policies Have?

Client signing a contract

One often overlooked provision rental reimbursement policies have is renting vehicles of comparable size to your own. For example, auto rental companies would not rent a Cadillac Escalade to a Honda Civic driver. However, you can upgrade and pay the difference between the daily limit and your policy’s max limit.

Remember, each rental reimbursement policy has maximum rental days and a reimbursement limit.

Do I Need Rental Reimbursement When I’m Not at Fault?

When you aren’t at fault in a collision, the other party’s insurance should cover the cost of your rental.

If fault is contested, things become less cut and dry. You’ll have to contact your insurer to set up a rental when this happens. If the other driver is proven to be at fault, then your insurance company will deal with theirs to reimburse you for your rental costs.

What is the Difference Between Rental Reimbursement and Rental Car Insurance?

Rental car reimbursement covers transportation expenses when your vehicle is out of commission due to a covered loss.

In turn, rental car insurance pays for liability and property damage due to vehicle-to-vehicle, vehicle object, and rollover collisions up to a maximum daily rate.

How Much Does Rental Reimbursement Cost, and What Are its Limits?

Rental car reimbursement coverage typically applies a daily policy limit and a maximum number of days. For example, Nationwide charges policyholders a $40 per day rate for up to 14 days. Any additional rental days in excess will force policyholders to go out of pocket.

Policyholders also have the option to request a higher claim limit. Some auto insurance companies allow as high as $2,250.

Your insurance company will reimburse you for your daily rental cost in these scenarios. If you already have collision coverage and comprehensive coverage, you can add rental reimbursement to your existing policy.

Rental reimbursement coverage isn’t limited to the cost of rental cars but public transportation and ride-sharing apps.

Which Auto Insurance Companies Offer Rental Car Reimbursement?

Almost all auto insurance companies offer rental car reimbursement. These include top-rated providers like Liberty Mutual, Nationwide, and AAA. In addition, many of them are well known for easy-to-use mobile apps that allow you to file insurance claims, reserve rentals, and add other coverage to your policy, such as 24-hour roadside assistance and gap insurance.

Is Rental Reimbursement Coverage Worth it?

Couple happily receiving a car key

Yes, rental reimbursement coverage is well worth it. With a large percentage of the population having no alternative other than public transportation to and from work, rental reimbursement helps cover much-needed transportation expenses.

Renting a vehicle out of pocket can easily exceed $70 a day, including the daily base rate and all applicable fees. Three weeks of out-of-pocket expenses approach $1,500 in total cost, well below the cost of an annual rental reimbursement premium.

Remember, rental reimbursement is not limited to rental vehicles. It also includes public transportation and ride-sharing services like Uber and Lyft.

Shop Around for the Best Car Insurance Rates

Understanding what rental reimbursement is and if it applies well to your situation will help you explore options with a new, affordable car insurance policy.‘s online platform allows you to review real-time quotes from hundreds of top-rated personal auto insurance providers such as Travelers, The General, and Metromile. It only takes a few minutes.

To get started, enter your ZIP code below:

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