If your car breaks down, will insurance cover a rental?

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If you have ever been in a situation where your car broke down on the side of the road, your thoughts probably ranged from “How do I get home?” to “Will my insurance cover a rental car?” Does full coverage car insurance cover rental cars, or will a liability-only policy be enough? Should you add rental reimbursement coverage to your existing car insurance policy? All of these questions, and potentially several others, are likely to cross your mind when in need of a rental. To help understand how and when your auto insurance coverage can step in to cover a rental car, it might help to know how insurance companies assess the associated costs.

If your car breaks down, will insurance cover a rental?

Whether you receive coverage for a rental car depends. If your vehicle is undrivable because of a car accident that someone else caused, the odds are fairly high that the at-fault party’s policy will help cover a rental car for you.

However, if you caused the accident, you will usually need to be carrying an optional coverage called rental reimbursement insurance to get your rental ride covered.

Rental car fees for breakdowns caused by mechanical issues are generally left for you to cover. Insurance policies only cover rental cars after a covered loss. If you get stranded on the roadside as a result of normal wear-and-tear or an unexpected engine issue, you will usually need to expense rental car fees out of pocket.

When does car insurance cover rental costs?

For your rental car to be covered by insurance, two things generally need to be true. First, the vehicle breakdown should have been the result of a covered insurance loss. Secondly, you or the other driver need to have the appropriate insurance coverage in place.

As mentioned, if you were at fault for the accident, the other driver’s policy will usually pay for your rental car. While this may be true, the time it takes for your claim to process may add a waiting period before you actually receive coverage for a rental.

On the other hand, if you were the at-fault driver, your policy may still pay for your rental — provided you have added rental reimbursement coverage. Many insurance providers will only offer the option to add rental reimbursement coverage to your policy if you also buy both collision and comprehensive coverage. As purchasing liability-only car insurance does not offer any financial protection for damage done to your own vehicle, you will likely want to purchase these coverages ahead of time to reduce out-of-pocket expenses.

Collision coverage helps pay to repair your own vehicle when it is damaged from either an at-fault accident or an accident with another underinsured motorist. Comprehensive coverage kicks in if your car gets damaged from something other than a collision. Comprehensive coverage offers protection for:

  • Theft
  • Vandalism
  • Falling objects, like tree limbs
  • Hitting an animal
  • Floods, hail and fires

If any of the above damages occur to your vehicle and cause you to put it in the shop, carrying rental reimbursement coverage could help pay for your rental car up to your policy limits.

Does car insurance include rental reimbursement coverage?

Rental reimbursement coverage does not come standard in many car insurance policies, but many insurance providers offer it as an add-on coverage. Many insurance professionals recommend that drivers consider adding it as its price usually does not impact the cost of your car insurance policy by very much.

Like all auto insurance coverage types, rental reimbursement coverage comes with limits. Usually, you will see these listed in your policy as a per-day and per-incident cap. You might get $30 a day up to $900 total, for example.

To better understand rental reimbursement coverage, it may be beneficial to differentiate it from two other similar-sounding or similar-functioning coverage types.

Coverage type Meaning
Rental reimbursement coverage This is the optional coverage that pays for a rental car if you cause an accident or experience damage that falls under your comprehensive coverage.
Rental car insurance These standalone policy types cover rental cars themselves. Generally, your auto insurance policy’s protections usually extend to rental cars, but you might need this supplemental coverage in some cases.
Mechanical breakdown coverage This optional type of insurance covers mechanical breakdowns that occur to your car’s internal parts, like its transmission or drivetrain. It does not cover general maintenance so you may want to take time considering its inclusions before purchasing it.

Do you need rental reimbursement coverage if you are not at fault in an accident?

If you are left without a vehicle because of an accident another person caused, their liability insurance should step in to cover the cost of your rental car. Generally, this coverage will pay for a reasonable replacement, meaning it may cover a vehicle similar to the one you own. And usually, you will continue getting rental car coverage from the at-fault driver’s policy until your car is repaired or, if your vehicle was totaled, until you get paid in full for it.

When does car insurance not cover rental car expenses?

There are some instances when you may not be able to lean on your rental reimbursement coverage for your rental costs. For example, you may have two vehicles listed on your policy: a car and a truck. If only the car has rental reimbursement coverage added, but the truck is in an at-fault accident that requires a rental, the truck would not receive coverage for rental fees.

Some other cases where rental car expenses are not covered include:

  • Vacationing rental: If you are headed out of town and want to rent a car at your destination, you will have to pay for it out of pocket. Your policy would not cover the rental, regardless of whether your trip is for business or pleasure, due to it not being expensed as a result of a covered loss.
  • Mechanical breakdown: If you are left car-less because of a mechanical issue, rental reimbursement coverage does not step in. Instead, it only pays for rental car costs if your car is out of commission due to a covered loss.
  • Routine maintenance: Similar to mechanical breakdown, if your car is in the shop for standard maintenance, your car insurance will not cover the costs for a rental between that time.

In sum, rental reimbursement coverage is an add-on that can pay for a rental if you add it to your policy and then experience a covered loss. But it has its limits, so policyholders cannot expect it to pay for all rental scenarios. In cases where you are in an accident and not at fault, you may receive coverage for a rental from the at-fault driver’s insurer, but the process could take time.

Written by
Kacie Goff
Personal Finance Contributor
Kacie Goff is a personal finance and insurance writer with over seven years of experience covering personal and commercial coverage options. She writes for Bankrate, The Simple Dollar, NextAdvisor, Varo Money, Coverage, Best Credit Cards and more. She's covered a broad range of policy types — including less-talked-about coverages like wrap insurance and E&O — and she specializes in auto, homeowners and life insurance.