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

On an open countryside road, a driver stands over the open hood of their car which has broken down.
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On an open countryside road, a driver stands over the open hood of their car which has broken down.
Adobe Stock
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Rental car reimbursement provides rental car coverage if your vehicle is in the shop for a covered claim. If your car breaks down, your rental reimbursement coverage 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 under repair due to damage from an accident or other covered event.

Understanding your auto insurance policy and what’s covered and not covered under rental reimbursement coverage can help you determine your insurance needs when unexpected issues come up, like if your car is 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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.

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 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

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