How Much Do Insurance Companies Pay for Rental Cars?
Understand how your auto insurance covers rental car costs after an incident. Learn about coverage, steps, and key considerations.
When a vehicle is involved in an incident, such as an accident, mechanical breakdown, or theft, securing alternative transportation often becomes an immediate concern. While your primary vehicle undergoes repairs or is declared a total loss, a rental car can provide the necessary mobility for daily life. Auto insurance policies may offer coverage for these rental expenses, though the extent of this coverage depends on the specific policy details. Understanding how this coverage works is important for navigating such situations effectively.
What Rental Car Reimbursement Coverage Entails
Rental car reimbursement coverage is an optional add-on to an auto insurance policy, typically requiring collision and comprehensive coverage. This coverage pays for a rental vehicle while your car is repaired or replaced following a covered event. Such events commonly include collisions, theft, vandalism, natural disasters like hail, or impacts with animals.
This coverage is structured with two main limits: a daily maximum and an overall maximum per claim. Policies often offer a daily limit of $30 to $70, with an overall cap between $900 and $1,500 per incident, or coverage up to 30 to 45 days. Unlike comprehensive or collision claims, rental reimbursement coverage typically does not have a deductible.
This coverage provides transportation while your vehicle is unusable due to a covered loss, not for routine maintenance or personal travel. It covers the rental rate. Expenses like fuel, security deposits, mileage overages, or upgrades beyond the daily limit are generally not included.
Steps to Obtain Your Rental Car
After a covered incident, the first step to using rental car reimbursement coverage is filing a claim with your insurance company. This initiates damage assessment and coverage eligibility. Once filed, your insurer reviews details to approve the rental.
Upon approval, work with your insurer to arrange a rental. Many insurers partner with rental companies for direct billing. The rental agency bills the insurer directly, minimizing your out-of-pocket costs. If you choose a company outside their network, you may pay upfront and submit receipts for reimbursement.
The rental company typically requires your claim number and insurer details. Coverage continues until your vehicle’s repairs are completed or a total loss settlement is processed, up to policy limits. Maintain communication with your insurer and repair shop to understand your vehicle’s expected unavailability.
Additional Considerations for Rental Car Use
If another driver is at fault, their property damage liability insurance may cover your rental car expenses. You might not need your own rental reimbursement coverage, potentially avoiding personal policy involvement and deductibles. Reimbursement through the at-fault driver’s insurer can directly cover a comparable rental until your car is repaired or replaced.
While rental car reimbursement covers the daily rate, it typically does not cover all associated costs. For example, fuel, mileage overage charges, or upgrades to a more expensive vehicle are generally not reimbursed. Fees for additional drivers or supplemental rental car insurance offered at the counter are usually excluded, as your personal auto policy may already extend coverage.
Some credit cards provide secondary rental car insurance benefits that can supplement your primary auto policy. This coverage acts as a backup, addressing expenses not covered by your main policy, such as deductibles or damage to the rental vehicle. However, this credit card benefit typically covers damage to the rental car, not the daily rental cost. It usually requires the rental to be paid in full with that specific card while declining the rental company’s collision damage waiver.