If your car breaks down, will insurance cover a rental?
The Bankrate promise
At Bankrate, we strive to help you make smarter financial decisions. To help readers understand how insurance affects their finances, we have licensed insurance professionals on staff who have spent a combined 47 years in the auto, home and life insurance industries. While we adhere to strict , this post may contain references to products from our partners. Here's an explanation of . Our content is backed by Coverage.com, LLC, a licensed entity (NPN: 19966249). For more information, please see our .
Rental reimbursement insurance is designed to cover the cost of renting a car following an at-fault accident or another type of covered claim. It’s important to note, however, that while you may have rental reimbursement coverage as part of your policy, it likely doesn’t cover your rental car costs in all circumstances. For example, if your car breaks down due to a mechanical defect or breakage, rental reimbursement will not help to pay for a rental.
In order to be covered, it typically needs to be part of an accident claim or a claim for another covered event. It’s important to understand this distinction, as knowing what your auto insurance policy covers and does not cover under rental reimbursement coverage may help you determine your insurance needs. This information can come in handy if unexpected issues come up, like your car ending up unusable after an incident.
How does rental reimbursement work?
Rental reimbursement works like other claims filed with your insurance company. When you file a claim for rental reimbursement, your insurer will extend coverage up to your coverage limits. With rental reimbursement, your coverage could be a total amount, like $900, or a set amount of $30 a day, and up to $900 total. There are different coverage limits for rental reimbursement, so reviewing your coverage options with your insurance agent or company is best.
Here’s how rental reimbursement works:
- Purchase an endorsement for rental reimbursement. In most cases, an endorsement must be added to have rental reimbursement coverage, and it has to be added to each vehicle on your policy. Rental reimbursement provides coverage for claims filed under comprehensive or collision. Because of this, some insurers require both comprehensive and collision coverage on your policy; others only require comprehensive. In cases where your policy only has comprehensive, rental reimbursement would not provide coverage for incidents generally covered under collision since those would also not be covered.
- File a claim. Depending on the insurance company, you can typically do this online, in person, over the phone or on the insurer’s mobile app.
- Check your coverage amount. Your rental reimbursement coverage will either cover you up to a specific dollar amount per day or a total amount. Find out your allotted amount before you rent a car, so you know if you’ll be out of pocket.
- Choose a rental car. Most insurance companies have partnerships with rental car agencies. If you go with one of the partnered companies, the insurer will pay the agency directly for your rental car. If not, you may have to pay for the cost upfront and then get reimbursed by the insurance company.
- Confirm the details with the rental car agency. Before leaving with your rental car, go over the costs, who pays and when you have to return the car. You will usually only have approval from the insurance company for the time it will take the shop to repair your car.
When does car insurance cover rental costs?
Car insurance will cover rental costs after a qualifying claim is filed and approved. In these cases, you must already have rental reimbursement on your policy prior to the accident for there to be coverage. If you are not at fault, the other driver’s property damage liability insurance will pay for your rental car while your vehicle is under repair.
|When car insurance covers a rental||When car insurance will not cover a rental|
|For an at-fault accident and the claim is covered under your comprehensive or collision coverage||If your vehicle breaks down due to a mechanical issue, or your car is under repair for routine maintenance|
|Under the other driver’s property damage liability in a not at fault accident||When you go on vacation or a business trip and need a rental car while away|
Rental car reimbursement coverage from your insurance company will only cover your rental costs after a covered loss. It will not cover you if your car has suffered a mechanical breakdown or if you are taking a personal or business trip and need a car while you’re away.
Does car insurance include rental reimbursement coverage?
Rental reimbursement coverage is not standard in many car insurance policies, but many insurance providers offer it as 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 up to $30 a day and up to $900 total, for example.
Rental car reimbursement vs. other optional coverage types
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.
|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 is covered by your insurer.|
|Rental car insurance||These standalone policy types would cover rental cars if you were involved in an accident while driving a rental car. In most cases, your auto insurance policy will extend coverage to your rental car to cover it like your regular vehicle. But you may need extra coverage if your insurer restricts this extension, or your policy does not have comprehensive and collision coverage, and you need it for your rental car.|
|Mechanical breakdown coverage||This optional 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 property damage 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 paid for your vehicle. 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 the 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, but the truck is in an at-fault accident that requires a rental, your rental reimbursement coverage would not apply.
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 rental fees out of pocket. Your policy would not cover rental expenses, regardless of whether your trip is for business or pleasure.
- 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 recommend rental reimbursement coverage due to the low cost and peace of mind it can provide.
Frequently asked questions
While the costs can vary from provider to provider, rental car reimbursement coverage is usually relatively inexpensive. It will often be cheaper than renting a car out of pocket, even one time after a covered loss. Most insurance experts generally recommend the coverage as it will save you money if your car is damaged in a covered event.
Whether or not your car insurance policy will pay to tow your car if it breaks down depends on a couple of factors. Like rental reimbursement insurance, roadside assistance is a common optional coverage you can add to your policy with most insurers. If you have a roadside assistance policy or endorsement, it generally provides coverage for towing (up to a certain mileage limit), lockout services, tire changes, battery jumps, fuel delivery and more in some cases. If you do not have this optional endorsement on your policy, you will typically have to pay for towing and services yourself, or by enrolling in a roadside assistance membership program like AAA.
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.