What rental reimbursement coverage does
Rental reimbursement is an optional add-on to your car insurance that pays for a rental car while yours is being repaired after a covered accident or loss. It covers the daily rental cost up to a limit you choose when you buy the coverage — typically $30 to $75 per day, with a total limit of $900 to $1,500 per claim. The insurance company pays the rental company directly, or reimburses you if you paid out of pocket.
This coverage only works if you have a collision or comprehensive claim that your insurer approves. It does not cover rentals for other reasons, such as routine maintenance, recalls, or if you caused damage that falls outside your policy. The rental period usually starts the day your car is deemed a total loss or taken in for repairs, and ends when your car is returned to you or declared a total loss.
Rental reimbursement is separate from your collision or comprehensive coverage — you pay an extra premium for it, and you need both to use it. If you carry only liability coverage, rental reimbursement will not be available to you.
Key Takeaways
- Rental reimbursement pays for a rental car while yours is repaired, up to a daily limit and total limit you choose when you purchase the coverage.
- Your insurer must first approve your collision or comprehensive claim before rental reimbursement kicks in — it does not cover rentals for maintenance or other reasons.
- You choose the daily limit ($30 to $75 is common) and total limit ($900 to $1,500 is typical) when you add the coverage to your policy.
- The rental period starts when your car enters the repair shop and ends when it is returned to you, not when you pick it up from the shop.
- Some insurers cap rental reimbursement at the actual cash value of your car, so a luxury rental may not be fully covered even if your daily limit is high.
How to add rental reimbursement to your policy
Contact your insurance agent or log into your online account to add rental reimbursement as a rider to your collision or comprehensive coverage. You will choose a daily limit (the amount paid per day) and a total limit (the maximum the insurer will pay per claim). Most insurers offer daily limits in $5 or $10 increments between $25 and $100, and total limits between $600 and $2,000.
The premium for rental reimbursement is usually small — often $5 to $15 per month depending on your daily limit and your insurer — but it varies by state and company. Ask your agent for the exact cost before you commit. Some insurers bundle it with other optional coverages or offer discounts if you add multiple riders at once.
You can add rental reimbursement at any time, not just when you first buy your policy. However, it will not cover a claim that happened before you added it. If you are financing or leasing your car, your lender or lessor may require you to carry it.
What happens when you file a claim
After you report an accident or loss to your insurer, a claims adjuster will inspect your car and decide whether the damage is covered under your collision or comprehensive policy. If it is approved, the adjuster will estimate the repair time or declare the car a total loss. This is when your rental reimbursement coverage begins.
Contact your insurer and tell them you need a rental car. They will either direct you to a preferred rental company (many insurers have partnerships that waive deductibles or offer discounts) or tell you to rent from any company and submit a receipt for reimbursement. If you use a preferred vendor, the insurer usually pays the rental company directly and you pay only your deductible, if any.
Keep all receipts, the rental agreement, and proof of the rental dates. Your insurer will need these to process the reimbursement. If you paid for the rental yourself, submit the receipts within the timeframe your insurer specifies — usually 30 to 90 days after the rental ends.
Daily limits, total limits, and what they mean for your bill
The daily limit is the maximum amount your insurer will pay per day. If you choose a $50 daily limit and rent a car for $65 per day, you pay the extra $15 out of pocket. The total limit is the cap on the entire claim — if your daily limit is $50 and your total limit is $1,000, your insurer will pay for up to 20 days of rental, even if you need the car longer.
Choose a daily limit that matches the cost of a mid-range rental in your area. A compact or economy car typically costs $35 to $55 per day at most rental chains, while a sedan or SUV may cost $50 to $80. If you choose a daily limit lower than the rental cost, you will cover the difference yourself.
The total limit should reflect how long repairs typically take in your area. If your car needs two weeks of work, a $50 daily limit with a $1,000 total limit covers 20 days, which is enough. If you choose a lower total limit, you may run out of coverage before repairs are done.
Situations where rental reimbursement does not pay
Rental reimbursement only covers rentals during the repair period for a covered claim. It will not pay if your car is in the shop for routine maintenance, recalls, warranty work, or repairs not related to a covered accident or loss. It also will not cover a rental if you caused damage that falls outside your policy — for example, if you have collision coverage with a $1,000 deductible and the damage costs $800, your insurer will not approve the claim, and rental reimbursement will not explore.
If your car is declared a total loss, rental reimbursement usually stops once the insurer pays you the settlement, even if you have not yet bought a replacement. Some policies cover rentals for a set number of days after a total loss (often 10 to 14 days), but this varies by insurer and state.
Rental reimbursement also does not cover upgrades or add-ons you choose at the rental counter, such as premium insurance, GPS, or a higher-tier vehicle class. Your insurer will reimburse only the base rental rate for a standard vehicle in the same class as your car.
How rental reimbursement interacts with other coverage
If you have both collision and comprehensive coverage, rental reimbursement works with whichever one applies to your claim. A collision claim covers damage from an accident with another vehicle or object; comprehensive covers theft, weather, vandalism, and other non-collision events. Rental reimbursement activates once either claim is approved.
Some insurers cap rental reimbursement at the actual cash value of your car. This means if your car is worth $10,000 and your daily limit is $75, the insurer may refuse to pay for a luxury rental that costs $150 per day, because the total reimbursement would exceed the car's value. Check your policy or ask your agent whether your insurer applies this rule.
If you are at fault in an accident and the other driver sues you, rental reimbursement does not cover your rental costs — only your collision or comprehensive coverage does. Liability coverage pays for damage you cause to others, not for your own losses.
Comparing rental reimbursement to other options
Some people skip rental reimbursement and instead use a credit card that covers rental cars, or they rely on a family member's vehicle during repairs. A credit card benefit may cover the rental cost if you charge it to that card, but it usually does not cover the daily limit you choose — it covers the actual cost up to the card's limit, which may be lower or higher than your policy limit.
Renting out of pocket and submitting a receipt for reimbursement is slower than having your insurer pay the rental company directly, because you have to wait for the claims adjuster to process your receipt. If you do this, keep the original rental agreement and all receipts, and submit them promptly.
Some rental companies offer daily rates that are lower if you book through your insurer's preferred vendor program. If your insurer has partnerships, ask whether using a preferred company saves you money compared to booking independently.
Frequently Asked Questions
Does rental reimbursement cover the cost of gas and insurance at the rental counter?
No. Rental reimbursement covers only the base daily rental rate. It does not cover gas, insurance add-ons, tolls, or other charges. If you buy the rental company's insurance at the counter, you pay for that separately — your own auto insurance does not reimburse it.
What if my car is in the shop longer than my total limit covers?
Once your total limit is exhausted, your insurer stops paying. You are responsible for any rental costs beyond that point. This is why choosing a total limit that matches typical repair times in your area matters. If repairs take longer than expected, contact your insurer to ask whether they will extend coverage — some do in cases of significant delays.
Can I rent a luxury car and have my insurer pay for it?
Only if the daily rate falls within your daily limit. If you rent a luxury car for $120 per day and your daily limit is $50, you pay the extra $70 out of pocket. Some insurers also cap reimbursement at the actual cash value of your car, which may prevent you from renting a much more expensive vehicle.
Does rental reimbursement explore if I was not at fault in the accident?
Yes, as long as the other driver's insurer or yours approves your claim. If the other driver is at fault, their liability coverage may eventually pay for your rental, but your own rental reimbursement coverage kicks in when ready while the claim is being sorted out. You may be able to recover the cost later through subrogation.
What if the repair shop recommends a specific rental company?
You are not required to use the shop's recommendation. You can rent from any company, as long as the daily rate does not exceed your daily limit. However, if your insurer has a preferred vendor program, using that company often saves you money because the insurer may waive deductibles or offer discounts.