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

Car broken down on rural road
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Rental car reimbursement provides rental car coverage if your car is in the shop for a covered claim. If your car breaks down, your insurance likely will not cover a rental car because it’s not a covered claim. Coverage for renting a car typically only kicks in when your car is being repaired due to damage from an accident or other covered event. Mechanical breakdowns are generally not included as a covered event.

Understanding your auto insurance policy and what’s covered and not covered can help you determine your insurance needs when unexpected issues come up, like having your car break down.

How does rental reimbursement work?

Rental reimbursement coverage only works when you have purchased a policy that includes it or purchased it as a separate endorsement, file a claim and have it approved. If you have rental reimbursement on your car insurance, you will typically be eligible to rent a car up to a certain dollar amount per day while your car is being repaired due to a covered loss. If you decide to rent a car that costs more than your coverage allotted, you can usually pay the difference out of pocket. Typically, your insurance company will pay the rental company directly if they are partnered. If not, you usually have to pay upfront, and the insurance company will reimburse you up to your policy limits. If another driver caused the damage for the covered loss, a rental car should be covered by their car insurance liability coverage.

Rental reimbursement coverage is per vehicle, whether you have a single car or multiple vehicles insured on the same policy. If you have two cars and only one has rental reimbursement coverage, your rental car will not be covered if you file a claim under the car that does not have this coverage listed. The rental amount covered and length of time varies by company, policy and the amount of time you are actually without your car, so be sure to read your policy and stay in contact with your claims adjuster to know your limits and responsibility.

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. As mentioned above, a mechanical breakdown is typically not a covered insurance loss. Secondly, you or the other driver need to have the appropriate insurance coverage in place.

As mentioned, if someone else was 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. It may be beneficial and more timely to use your own rental reimbursement coverage and have your company subrogate the expense to the at-fault party instead.

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 an at-fault accident. 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 or loss of use 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 and loss of use coverage, it may be beneficial to differentiate the two from other similar-sounding or similar-functioning coverage types.

Coverage type Meaning
Rental reimbursement or loss of use coverage This is the optional coverage that pays for a rental car if you are involved in 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 consider its inclusions before purchasing it. Mechanical breakdown coverage does not include rental car reimbursement coverage.

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. However, since determining fault in an accident can take time, most insurance experts recommend purchasing your own rental reimbursement coverage. If someone else is at fault in an accident, you can use your own coverage immediately and then have your insurance company recover the cost for the rental car from the at-fault party or their insurance company once fault has been determined.

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. If you only have one vehicle, most insurance experts would recommend rental reimbursement coverage due to the low cost and peace of mind it can provide.

Frequently asked questions

How much does rental car reimbursement coverage cost?

While the costs can vary from provider to provider, rental car reimbursement coverage is usually relatively inexpensive, and will often be cheaper than the cost of renting a car out of pocket even one time after a covered loss. Most insurance experts recommend the coverage as it will typically save you money if your car is damaged in a covered event.

If my car breaks down, will insurance pay to tow it?

If your car breaks down and you have roadside assistance, your insurance may pay to tow it for repairs. Most roadside assistance car insurance coverage has a mileage limit, so you may not get the towing bill fully covered if the repair shop is far away from where it breaks down.

Written by
Mandy Sleight
Insurance Contributor
Mandy Sleight has been a licensed insurance agent since 2005. She has three years of experience writing for insurance websites such as Bankrate, MoneyGeek and The Simple Dollar. Mandy writes about auto, homeowners, renters, life insurance, disability and supplemental insurance products.
Edited by
Insurance Editor