What Is Rental Car Reimbursement Coverage and Is It Worth It?

In a perfect world, no one would ever be involved in a car accident or need car insurance. But in the real world, accidents happen.

If you were in an accident that left your car badly damaged, to the point that you were unable to drive it, how would you get where you needed to go? Maybe you’d carpool or borrow a car from a friend or family member.

Or maybe you’d take public transportation or use a ride-sharing service like Uber or Lyft to get around town. But wouldn’t you rather have your own wheels so you could go wherever you want, whenever you want, without the extra hassle or cost?

If so, rental car reimbursement coverage could be a good option for you. Let’s find out.

What is rental car reimbursement coverage?

Rental car reimbursement coverage is as simple as the name implies. If your own car isn’t available for your use, your insurance company will reimburse you for the cost of a rental car.

Of course, there’s some fine print.

Rental car reimbursement coverage will pay (for you) to rent a car if yours is no longer drivable after a covered accident.

“Rental car reimbursement coverage will pay (for you) to rent a car if yours is no longer drivable after a covered accident,” says Brad Goldsberry, agency producer for Farmers Insurance at The Nate Bingel Agency in Northglenn, Colo.

The important word is “covered.” If the accident wasn’t covered by your auto insurance policy, your rental car reimbursement coverage won’t kick in.

Discover how to find auto insurance that covers any driver

What does it cover?

“Rental car coverage isn’t for mechanical problems,” Goldsberry explains. “If your car breaks down, you would not be able to use this coverage to get a rental car.”

Likewise, if you don’t have comprehensive or collision coverage, neither an accident nor a rental car would be covered.

Rental car coverage isn’t for mechanical problems. If your car breaks down, you would not be able to use this coverage to get a rental car.”

“If you have liability (coverage) only, there’s nothing to cover (an accident), and therefore, you would not be able to have rental car reimbursement coverage,” Goldsberry says.

Renting a car for a vacation or recreational purposes also isn’t covered. On the upside, you typically can use rental car reimbursement coverage whether you were at fault for the accident or not.

You might also be able to use it if your car was stolen, vandalized, or damaged by severe weather.

Check out the ultimate guide to non-owned car liability insurance 

Do insurance companies have to pay for a rental car?

Rental car reimbursement coverage isn’t standard with most auto insurance. That means you’ll probably have to pay extra if you want it.

Rental car coverage isn’t for mechanical problems,” Goldsberry explains. “If your car breaks down, you would not be able to use this coverage to get a rental car.”
How much you’ll pay depends on your insurer’s rates and the daily reimbursement rate you want if you need to rent a car. You’ll pay more for a reimbursement rate of, say, $100 per day than you will for a lesser amount.

How much does it cost to rent a car with insurance?

How much you’ll pay to rent a car with insurance depends on whether you have rental car reimbursement coverage and, if so, how much your insurance will pay.

Rental car reimbursement coverage may be limited to a set number of days, such as 30. Some policies have a per-accident cap as well as a per-day cap.

If you choose to take public transportation instead of renting a car, your insurer might reimburse your fare instead of your rental car expense. Ask your insurer for details.

Rental car reimbursement coverage typically isn’t subject to a separate deductible.

Insurance is supposed to get you back to normal. If you can’t get to work after you get into an accident, that’s not back to normal.”

How to rent a car with insurance

Suppose you have rental car reimbursement coverage and you can’t drive your car due to a covered claim. Should you rent the car yourself and get reimbursed or ask the insurance company to organize the rental? Here is an in-depth analysis of the pros and cons.

How To Rent a Car With Insurance – Pros and Cons

WEIGH THE RISKS & BENEFITS

Here is a list of the benefits and the drawbacks of renting the car yourself and then submitting your receipt to your insurer for reimbursement.

Pros
  • Choose the car you want
  • Earn points, airline miles, or cash back if you pay with your own rewards card
  • You might get a better rate, which could save you money
  • You might get a nicer or bigger car
  • Less paperwork to handle
  • You won’t have to pay upfront out of pocket
  • You won’t have to wait for reimbursement
Cons
  • You might not get a choice of cars
  • You won’t earn points, airline miles, or cash back by paying with your own rewards card
  • More paperwork to deal with
  • You’ll have to pay upfront out of pocket
  • You’ll have to wait for reimbursement

Should you get rental car reimbursement coverage?

The answer depends on how much you’re willing to pay for additional insurance, how much you rely on your car, and how likely you are to be involved in an accident.

“Insurance is supposed to get you back to normal” Goldsberry says. “If you can’t get to work after you get into an accident, that’s not back to normal.”

Compare leading auto insurance companies side-by-side to find your best rate today. 

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