Your vehicle is a convenient and necessary tool for travel, but accidents happen. On average, there are over 6 million car accidents in the U.S. every year.1 If you’re in a car accident, will your car insurance cover rental costs? It’s critical to understand your car insurance policy and the benefits of rental reimbursement coverage.
What Is Rental Car Reimbursement?
Rental car reimbursement is an optional product offered by most major auto insurance companies. In the event you are in an accident, rental reimbursement coverage will cover rental car costs while your vehicle is being repaired.
The cost of rental reimbursement coverage varies, but drivers usually pay less than $200 a year. If your accident is severe, your car may be held for weeks at the auto repair shop. Rental cars charge daily rates, which can quickly add up to a substantial amount.
Rental reimbursement coverage could help you save a lot of money on rental costs. However, you may need to have full coverage insurance in order to add rental reimbursement coverage to your existing policy. Full coverage auto insurance generally includes liability, comprehensive, and collision coverage.
How Much Will I Pay for a Rental Car?
Suppose you opt out of rental reimbursement coverage and get into an unexpected car accident. In this case, you will need a rental vehicle while your car is repaired by a mechanic. According to Time, the average daily rate of an economy car rental is $105, while a full-size car rental is $137.2
Below is a table that provides a general idea of repair times for common types of damage sustained in accidents:
| Type of Damage | Minor (Hours) | Moderate (Days) | Major (Weeks) |
| Dents and Scratches | 2 – 5 hours | 1 – 2 days | – |
| Bumper Replacement | 3 – 6 hours | – | – |
| Windshield Replacement | 1 – 3 hours | – | – |
| Fender Damage | 5 – 8 hours | 2 – 3 days | – |
| Door Replacement | 4 – 8 hours | 1 – 2 days | – |
| Suspension Damage | – | 2 – 5 days | 1 – 2 weeks |
| Engine Damage | – | 3 – 7 days | 2 – 4 weeks |
| Transmission Damage | – | 3 – 7 days | 2 – 4 weeks |
| Frame Damage | – | – | 2 – 4 weeks |
If your vehicle has transmission damage, you may need a rental car for up to four weeks. A full-size car rental for 28 days may end up costing you $3,836! But if you had rental reimbursement coverage, your car insurance may pay a portion or the entire cost of a rental car!
Will Rental Reimbursement Coverage Pay for Towing Services?
If you’re in an accident, you may need to have your car towed. Whether your car insurance will cover the cost of towing depends on your insurance policy. Rental car reimbursement coverage does not cover towing costs, but you may not have to pay if you have roadside assistance. Roadside assistance is an optional coverage that covers a wide range of services, including:
- Battery jump-starts
- Lockout assistance
- Fuel delivery
- Towing
- Spare tire installation
How to Claim Rental Car Coverage
If you have rental reimbursement coverage, your provider will guide you through the claim process and explain your coverage details when you inform them about an accident. The process of claiming rental car reimbursement depends on your insurance provider. Your insurance company may provide rental car reimbursement after you provide receipts, or they may refer you to a specific rental agency they partner with.
Do I Have To Pay a Deductible for Rental Car Coverage?
Rental reimbursement generally does not require a deductible because your auto insurance provider has a daily limit and a per-claim limit. However, you may have to pay a deductible on your collision or comprehensive coverage to get your car repaired after a covered accident.
When you buy insurance, you have to choose a deductible amount, which is the amount you pay out of pocket before insurance starts paying for covered expenses. The average deductible on auto insurance is $500, but you may also choose options between $100 to $2,000. If you cannot afford the deductible amount after an accident, consider using a personal loan. These installment loans can provide up to a few thousand dollars of emergency funding. Eligibility depends on your recurring income and creditworthiness, but some lenders offer flexible requirements for bad credit borrowers. After signing a personal loan agreement, you can typically get your money the same day!
Limits and Restrictions of Rental Car Coverage
Rental reimbursement coverage can be a lifesaver when you need a rental after an accident. But unfortunately, there are limits to rental car reimbursement coverage that vary based on your auto insurance company and individual policy.
Your Car Must be Getting Repaired
In order to use your rental reimbursement, your vehicle must be repaired due to a problem covered by your auto insurance policy. This means your car insurance company will not pay for a rental if you’re going on vacation or need a routine oil change.
Daily and Per-Claim Limits
There are daily and per-claim limits to rental reimbursement. Suppose you have coverage that has a $25 per day and $750 per-claim limit. In that case, your car insurance will pay up to $25 per day to cover rental costs but no more than $750 per accident claim.
When you opt-in for rental reimbursement, your car insurance will have multiple pre-set daily and maximum limit choices. If you get a rental vehicle that costs more than your insurance company will pay, then you will have to pay the difference out of pocket.
Gas Costs
Your car insurance will not usually cover gas costs on rental cars. So you will have to pay for this type of transportation expense on your own.
FAQs About Rental Car Coverage
What Triggers Rental Reimbursement Coverage To Start Paying for a Rental?
Rental reimbursement coverage kicks in when your vehicle requires repairs due to a covered accident or damage. It doesn’t cover rentals for routine maintenance or non-accident related issues.
Can I Choose Any Rental Car I Want, or Are There Specific Types That My Insurance Will Pay For?
Your insurance typically limits the type of rental car available under your rental reimbursement coverage. You may be limited to an economy or standard size vehicle, depending on your policy details.
If My Car Is Drivable After an Accident but Still Needs Repairs, Will My Insurance Pay for a Rental Car?
Even if your car is drivable, you can still use your own rental reimbursement coverage if you need a rental car while yours is officially under repair. Check with your insurer to confirm that your situation qualifies.
How Do I Claim Rental Car Insurance if I Am Not at Fault in an Accident?
If you are not at fault, you may claim rental car costs from the at-fault driver’s insurance. However, having your own rental reimbursement coverage ensures you’re covered without waiting for the other party’s insurance to pay out.
Does Rental Reimbursement Coverage Include Additional Fees Like Insurance for the Rental Car or Other Rental Options?
Typically, rental reimbursement only covers the cost of the rental car itself. Additional fees like insurance for the rental or optional services will likely be out-of-pocket expenses unless specified otherwise in your policy.
What Should I Do if My Rental Car Gets Damaged While I Have It?
If the rental car gets damaged, you should report it to the rental agency and your insurance company immediately. Your rental car insurance or your personal auto insurance may cover the damages, depending on the circumstances and your coverage types.
CreditNinja: The Bottom Line on Rental Car Costs
The benefit of having rental reimbursement is that your insurance provider will pay for a rental car while your primary vehicle is being repaired. But before you add this type of coverage to your existing auto policy, it’s critical to know the limits and restrictions.
At CreditNinja, we aim to provide accurate and useful financial information to consumers. That’s why, in addition to offering online loans, we also provide a financial blog. We answer all types of questions, such as “What happens if I deposit a bad check?” and “What is an amortized loan?”
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