If your car goes to the repair after an accident, you could be without your car for weeks and rental car costs can add up quickly. The average length of rental for collision replacement-related rentals was 17 days for the second quarter of 2023, according to Enterprise Rent-A-Car.

Rental reimbursement auto insurance helps pay for a rental car if your car is damaged or destroyed due to a problem covered by your policy, like a crash, flood or fire. Without this coverage, you would have to pay for a rental car out of pocket.

What Is Rental Reimbursement Auto Insurance?

If your car is being repaired for an accident insurance claim, rental reimbursement coverage pays for transportation costs, such as a rental car or public transportation fees. Typically, this type of coverage can be added only when you have comprehensive and collision coverage in your car insurance policy.

Here are some key things to consider about rental reimbursement auto insurance:

  • Some auto insurance companies may reimburse transportation expenses that aren’t rental cars. If you choose not to rent a car, some policies may pay for other transportation expenses such as Uber, city buses, light rail and commuter train fares.
  • Rental reimbursement insurance usually doesn’t have a deductible. That means you won’t have a deductible amount subtracted from your claims check. But you will have a deductible on your collision and comprehensive coverage to get your car fixed.
  • Some insurers may have partnerships with rental companies. This means that the rental company will bill your insurance company directly. If you choose to rent from another company, you may have to pay the costs upfront and then get reimbursed by your insurance. For example, if you have rental reimbursement coverage from Geico and choose Enterprise Rent-A-Car, the company will bill Geico directly.
  • Rental reimbursement might not be available for policies on antique and classic cars.
  • Policy discounts often apply to rental reimbursement coverage. For example, if you have a multi-car discount it can apply to rental reimbursement coverage.
  • Rental reimbursement coverage is not the same thing as rental car insurance that you’d buy, for example, to rent a car for a vacation. Rental reimbursement coverage is specifically for times when your car is in the shop for a claim covered by insurance.

Do I Need Rental Reimbursement Coverage?

Renting a car for a few days or even weeks can add up. If you don’t have wiggle room in your budget to pay for this extra expense, you might consider adding rental reimbursement insurance to your auto insurance policy. It can be especially valuable if your car will be in the shop for an extended period—which of course is impossible to predict when you buy or renew your policy.

“The additional coverage is generally inexpensive to add to a policy and may be a good option for those who don’t want to be stuck paying for a rental on their own or won’t have access to alternative transportation while their car is in the body shop,” says Ron Davis, a spokesperson for Progressive.

Since location is one of the key factors in determining how much a rental car costs, you want to make sure the extra coverage makes sense for your specific location. For example, let’s say it costs $3 per month for a $30 per day reimbursement limit. If comparable cars rent for $40 per day in your city, you may need to increase the reimbursement coverage limit, or just plan to pay the difference.

Rules and Limitations on Rental Reimbursement Insurance

Rental reimbursement coverage generally only pays for a rental car or other transportation costs when your car is being repaired after an accident or incident that your insurance covers. You should be aware of a few common rules and limitations.

Daily and Per-Claim limits

Rental reimbursement coverage has daily and per-claim limits. For example, if you have coverage that has a $30 per day and $900 per limit, your insurer will pay up to $30 per day for rental expenses but no more than $900 per accident claim.

You can rent a car that costs more than the insurance limit, but you will have to pay the difference if your daily rate or total limit exceeds your policy limits.

Each insurer will have pre-set daily and maximum limit choices. For example, an AAA car insurance policy we examined had daily limit choices between $35 and $75, with associated maximum total limits of $1,050 to $2,250.

Gas, Mileage or Other Coverage Costs

Certain transportation expenses are not always covered. For example, you’ll still have to pay for gas.

Your Car Must be Getting Repairs Due to a Problem Covered by Your Policy

Rental reimbursement coverage can’t be used for routine maintenance or a vacation rental car. It can only be used if you need a rental car while your car is in the shop being repaired for a problem covered by your auto insurance policy.

Rental Reimbursement Costs

Each insurer will calculate its own rates for rental reimbursement coverage, and rates will vary by state. The lowest level of coverage is often around $30 a year or less, which will buy rental reimbursement of $30 a day. Here’s an example.

Rental Reimbursement Insurance Rates From Nationwide in Florida

Daily and total maximum Annual base rate

$30 a day/$900 max

$27

$40 a day/$1,200 max

$36

$50 a day/$1,500 max

$45

$60 a day/$1,800 max

$54

$75 a day/$2,250 max

$67.50

$100 a day/$3,000 max

$90

Base rates shown for Nationwide General Insurance Co. in Florida

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Rental Reimbursement Insurance FAQ

What if someone else caused an accident and I have to rent a car?

If someone else crashed into your vehicle, you can make a claim against their auto liability insurance for both your car repairs and a rental car during the repairs. This is referred to in the industry as a third-party loss of use claim.

In fact, some states allow you to sue the other driver for loss of use (rental car costs) even if you didn’t actually rent a vehicle.

In cases like this, it doesn’t matter if you have rental reimbursement coverage on your own policy because you’re making a claim against someone else’s insurance.

Do I need to buy the rental agency insurance if I rent a car?

Generally the coverage on your personal auto insurance policy will transfer with you to a rental car, so you don’t need to buy the expensive insurance at the rental counter. Check with your auto insurance agent to confirm.

Some people choose to buy the collision damage waiver anyway (CDW) so that they don’t have to make another claim on their own collision or comprehensive insurance if they damage the rental vehicle.

How is rental reimbursement coverage different from rental car insurance?

Rental reimbursement insurance is a coverage you add to your personal car insurance policy that pays for a rental if your car is being repaired for a problem that’s covered by the policy.

Regular rental car insurance can be purchased whenever you want to rent a car for business or personal travel, and is not tied to an insurance claim.

Is rental reimbursement insurance worth it?

If you don’t have alternative transportation (like a second car or someone to drive you around), rental reimbursement coverage is worth considering. That’s because the average length of rental for a collision claim is 17 days, according to Enterprise Rent-A-Car.

Rental reimbursement coverage pays for rental cars and other forms of transportation, like bus and subway fare. It’s a relatively inexpensive coverage that will typically cost you about $25 to $100 extra per year, depending on how much coverage you buy. But if you don’t need a rental car or public transportation if your car is in the shop, it’s not worth adding coverage you won’t use.