What Is Rental Car Reimbursement Coverage?

If you’ve recently been in an accident and your car is stuck in the repair shop, you might wonder if insurance will cover a rental car. It does, but only if you have a rental car reimbursement coverage, which is also known as rental car coverage or transportation expense coverage. It’s an optional add‑on to your auto insurance policy.

When your vehicle is undrivable after a covered claim, this coverage helps pay for a temporary rental so you can keep moving, whether it’s commuting to work or picking up your kids. 

It’s simply a backup plan for your transportation. Without it, you could be left paying out of pocket or relying on rideshares. And with it, your insurer helps cover rental costs up to a set limit. It doesn’t replace your primary auto insurance, but it works alongside it to ease the burden when you need it most. 

How Does Rental Reimbursement Coverage Work?

Here’s how it works. When your car is damaged in a covered accident and goes in for repairs, your insurance company steps in. They’ll reimburse you for the cost of renting a car, up to the daily and total limit listed on your insurance policy. 

For example, your policy might cover $30 per day for up to 30 days. That means you can rent a vehicle while your car is in the shop, and your insurer will pay the rental company directly or refund you later. 

Simple real-life example: 

Let’s say you’re rear-ended on your way to work, and your car needs a week of repairs. Your rental reimbursement kicks in immediately. You rent a compact car for $28 per day. Your insurer covers the cost, so you don’t have to worry about unexpected expenses while your vehicle is in the body shop. 

Rental car reimbursement coverage helps pay for your temporary transportation when your vehicle is being repaired after a covered accident. It’s designed to keep your life moving while your car is in the body shop. 

What Does Rental Car Reimbursement Pay for?

Typically, your insurance company will cover: 

• The cost of a rental vehicle while your car is in repair for a claim covered by your auto insurance. 
• A daily allowance (for example, $30 per day) up to a total limit (like $900 per claim). 
• Transportation alternatives, such as rideshare or public transit, if your policy allows it.

It’s important to remember that this type of car insurance coverage only applies when your car is being repaired due to a covered claim, such as a collision or comprehensive loss.

How Much Will Rental Reimbursement Coverage Pay Off?

The amount your rental reimbursement coverage pays depends on your insurance policy limits. Most insurers offer a daily limit and a maximum total limit for the rental period. 

Based on our research, this add-on can pay $25 to $100 per day for a rental car, depending on policy limits and chosen insurance provider. 

For example, your plan might cover $30 per day up to $900 per claim. Some policies let you choose higher limits, like $40 or $50 per day, if you drive a larger vehicle or need more flexibility. 

Always make sure to stay within your policy’s limit because any amount over that daily allowance comes out of your pocket. 

How Long Will Insurance Pay for a Rental Car After an Accident?

Your insurance company will pay for a rental car only as long as it takes to repair your vehicle or until you hit your policy’s maximum limit. The Insurance Information Institute (III) notes that, on average, cars spend about two weeks in the repair shop after an accident. 

Most insurers cover rentals for up to 30 days or until your car is deemed repaired or totaled, whichever comes first. For example, if your vehicle needs 10 days in the body shop, your rental reimbursement coverage will usually cover that period within your daily limit. 

However, if repair delays stretch beyond your coverage cap, you’ll need to pay out of pocket. That’s why it’s smart to choose a limit that matches your needs. The longer or more complex your repairs are, the more valuable this coverage becomes. 

What Does Rental Reimbursement Add-On Not Cover?

While rental reimbursement coverage helps with costs after a covered accident, it doesn’t cover everything. It only applies when your car is in the shop due to a covered loss, like a collision or comprehensive claim. 

Here’s what it typically does not cover: 

• Routine maintenance or mechanical breakdowns. 
• Times when your car is in the shop for upgrades or recalls. 
• Rentals during vacations or trips unrelated to a claim. 
• Luxury vehicles or specialty cars beyond your policy’s price limit.

Also, it won’t pay for gas, security deposits, or additional insurance offered by the rental company. In short, it’s a practical coverage, just not a catch-all. It’s designed to help you get back on the road, not cover every rental situation.

Who Can Buy Rental Car Reimbursement Coverage?

Almost anyone with a car insurance policy that includes collision insurance and comprehensive coverage can buy rental car reimbursement coverage. As you already know, it’s an optional add-on, not something automatically included in your plan. 

Note that if you only have liability auto insurance, you won’t be eligible to buy this addon 

You’ll need to already have full coverage auto insurance (collision and comprehensive) in place because rental reimbursement is meant to supplement, not replace, your main policy. Without collision or comprehensive protection, most insurance companies won’t offer it. 

This coverage is ideal for drivers who rely on their vehicle every day for work, errands, or family transport. Whether you’re in Michigan, Colorado, Texas, or anywhere in the U.S., it gives you peace of mind knowing your insurance will help with rental costs after a covered accident. 

Need affordable full coverage auto insurance so that you can add rental auto reimbursement coverage? Do it with L.A. Insurance. It takes just a few minutes to insure your vehicle with us. 

Do You Need to Pay a Deductible for Rental Reimbursement Insurance?

No, you typically don’t pay an auto insurance deductible for rental car reimbursement coverage. This add-on works differently from your collision or comprehensive insurance coverage. 

When your vehicle is in the shop for a covered claim, your insurer reimburses the cost of your rental car without requiring you to meet a deductible first. However, you’ll still need to pay the deductible on the original repair claim before your vehicle is fixed. 

How Much Does Rental Reimbursement Auto Coverage Cost?

Rental reimbursement auto coverage is one of the most affordable auto insurance add-ons you can buy. On average, it costs between $2 and $15 per month, or roughly $25 to $100 per year. 

Here’s a quick cost breakdown: 

• Per Month: $2 to $15 
• Per 6-Month Policy: $10 to $50 
• Per Year: $25 to $100

The cost depends on a few key factors: 

• Coverage limits: Higher daily and total limits (like $50/day or $1,500 per claim) cost more than basic $30/day coverage. 
• Insurance provider: Rates vary among companies like L.A. Insurance, Progressive, State Farm, and Geico. 
• Location: Areas with higher rental car rates or urban demand may increase premiums slightly.

Learn more about car insurance costs.

Who Pays for a Rental Car After an Auto Accident?

Who pays for a rental car after an auto accident depends on who caused the crash and what kind of insurance coverage you have. 

If you’re at fault, your rental reimbursement coverage will pay for your rental car while your vehicle is being repaired. However, if the other driver is at fault, their liability insurance should cover your rental costs. Sometimes, you’ll need to pay upfront and get reimbursed later once the fault is confirmed. 

When both drivers share fault, or the fault is disputed, things can get complicated. That’s why having rental car reimbursement coverage is smart. It makes sure you’re covered regardless of who’s responsible. 

In short, if your car is undrivable after a covered accident, someone’s insurance, either yours or the other driver’s, will pay. But having your own coverage means you don’t have to wait for anyone else’s insurer to act. 

How to Get Rental Reimbursement Coverage

Getting rental reimbursement coverage is super simple. You can add it to your existing auto insurance policy through your insurance provider, online, by phone, or through a local agent. 

Start by checking if you already have comprehensive and collision coverage. Most insurers require both before you can buy this add-on. Then, choose your daily limit and maximum payout. For example, you might select $30 per day up to $900 per claim. 

The cost is low, often just a few dollars a month, but the convenience is high. So next time you review your car insurance coverage, ask your agent to include rental car reimbursement. 

Rental Car Insurance vs. Rental Car Reimbursement Coverage: What’s the Difference?

Many drivers confuse rental car insurance with rental car reimbursement coverage, but they protect you in very different situations.  

Rental car insurance is what you buy from a rental company when you rent a car for a trip or short-term use. It protects the rented vehicle from damage, theft, or liability while you’re driving it. This type of coverage is temporary and only applies during the rental period. 

Rental car reimbursement coverage, on the other hand, is part of your auto insurance policy. It pays for your rental vehicle when your car is being repaired after a covered accident. It doesn’t insure the rental car itself. It simply helps cover the transportation costs while your main car is in the shop. 

In simple terms, rental car insurance protects the car you rent for travel. Rental car reimbursement coverage helps you afford a rental while your insured car is being fixed after a claim. 

Here’s a quick table to understand the differences: