Will Your Insurance Pay for Your Rental Car When Your Vehicle is Being Repaired?

When I was in an auto accident years ago, the case got complicated. There was a dispute over blame, and the insurer wasn't sure whether to total the car or not. The result was that it took weeks to get my check from the insurer.

The problem was, I only had one car at the time, and I needed that car to get to and from school and work. Fortunately, I had opted for optional coverage called "rental car reimbursement," and that paid for the cost of a rental car until I was able to get my car returned.

The downside was that the coverage did not pay enough to rent an SUV like the one I had, but I was still very glad that it wasn't an out-of-pocket expense. With this coverage, insurance will pay for a rental car when you have a covered loss. Without it, it won't.

Will insurance pay for a rental car?

When you buy a policy for your vehicle, you have certain types of car insurance you are required to buy such as bodily injury liability insurance. You also have optional add-ons that you can choose to add to your policy.

The types of optional insurance that you buy will determine what your car insurance covers. Rental reimbursement is one of those types of optional coverage. If you choose to buy it when you sign up, then your policy will pay for your rental car after a covered loss.

If you don't choose to buy it, then you won't have coverage unless another driver causes your crash, is covering your losses, and agrees to cover your rental.

Insurance companies do set limits on coverage, though. These limits relate to:

• How long your insurer pays for your rental car
• How much your insurer pays per day

If you have coverage for longer or have a higher daily limit, your rental car reimbursement coverage will cost more. The best car insurance companies give you the option to get very comprehensive coverage, but different insurers have different rules for how much reimbursement coverage you can buy.

Rental car reimbursement limits and restrictions

It may be tempting to save on car insurance by turning down this coverage or buying a low amount of protection, but since the average cost of a rental car is around $50 to $80 a day (according to Fidelity), you could regret making your limits too low.

Progressive rental car reimbursement limits and restrictions

Progressive offers rental car reimbursement insurance for up to 30 days with daily limits between $40 and $60.

GEICO rental car reimbursement limits and restrictions

GEICO does not disclose its limits online but provides the example of a $25 per day and $750 per claim limit for this type of protection.

Allstate rental car reimbursement limits and restrictions

Allstate does not specify the maximum amount of coverage you can buy but provides the example of a $30 per day limit for up to 30 days.

When rental reimbursement coverage applies

Rental car reimbursement coverage applies only if you have a covered loss. This means your insurance policy must be paying for the damage to your vehicle because it occurred as a result of a loss that your insurance company provides protections against.

If you crash your own car, for example, then your rental car reimbursement coverage would kick in only if you had collision coverage that pays for crashes you cause.

If your car is damaged by hail, on the other hand, or because a tree falls on it, then you would be covered for a rental car only if you had comprehensive coverage because that's the type of policy that covers these non-crash-related losses.

If another driver damaged your vehicle, then their liability insurance would typically be responsible for paying for your rental, but you may need to negotiate the terms with the insurer.

If you need routine repairs on your car, though, like new tires or brakes, then rental car reimbursement coverage won't pay for you to get a rental when your repairs are taking place.

How long does insurance cover a rental car?

The amount of time that auto insurance covers a rental car varies by policy. Some insurers set their limits based on the number of days covered such as paying for a car for 30 days. Others have a dollar amount limit like paying $25 per day up to a total limit of $750.

You'll typically want to err on the side of choosing a longer period of coverage because car repairs can take time, and you don't want to have to return your rental car while you still need it or start paying out-of-pocket for coverage after just a few short weeks.

What to expect from the rental reimbursement claims process

When you have rental reimbursement coverage, typically no deductible applies. Your insurer will begin paying the bill from the first day that you need the car after a covered loss.

Some insurance companies have relationships with rental car companies to make the claims process easier. For example, if you have Geico insurance and you use Enterprise to rent your vehicle, the rental company will bill Geico directly. This can simplify the process and allow you to avoid potentially having to pay the bill and get reimbursed.

You do have a right to rent a car from any rental provider or location that you want. However, if your car comes from a rental company that is not within your insurer's network, then you may have to pay for the vehicle and submit a claim for reimbursement.

Regardless of whether your insurer is paying for the car directly or reimbursing you, you are generally also required to provide a credit card to make a security deposit for the rental vehicle. That way, the car company can charge you if you damage the rental while you're driving it.

FAQs

Bottom line

Rental car reimbursement is a very important type of coverage if you don't want to be left without a vehicle after a car accident or if you don't want to be forced to pay a big bill to a rental car company.

You should shop carefully for the best car insurance to find an insurer that offers affordable rental car reimbursement coverage with a daily limit that will pay for the vehicle you need.