Does my car insurance cover a rental if my car is out of service?

Your car insurance company may cover a rental car while it’s being repaired after an accident. Here’s what you need to know about rental reimbursement coverage. (iStock)

In the event of an accident or if your car breaks down, you need to make sure you’re covered. Your car could be in a repair shop for days or weeks, and paying for a rental car out of pocket would be costly. Don’t assume that your car insurance policy automatically covers the cost of a rental, rental insurance can be an add-on.

Comparing multiple insurance quotes can potentially save you hundreds of dollars per year. To see how much you can save, visit Credible to get a free quote in minutes and explore its partners.

What kind of car insurance covers a rental car?

If you have rental reimbursement coverage, your auto insurance provider will cover the cost of a rental car or public transportation expenses while your vehicle is being repaired due to a covered loss. Auto insurance will not cover a rental car unless you have rental reimbursement coverage and if there’s damage to your personal car as a result of something covered by your collision coverage and comprehensive insurance.

Insurance providers will cover the cost of the rental vehicle until your car is back on the road or until your insurance coverage limit runs out, whichever comes first. If you need a new vehicle, authorized rental time will be limited.

You can typically choose where to rent but some insurers may partner with specific rental car companies. If the company is in your insurer’s network, your insurance company may be able to directly bill the car rental company. However, if it’s outside their network, you may be responsible for upfront costs and then request a reimbursement.

Wondering how much you could save on your insurance plan? Head over to Credible to get a free quote from its partners. It only takes two minutes.

In what scenarios will insurance cover a rental car?

Covered scenarios include accidents or damage that fall under your comprehensive or collision coverage. Collision insurance covers damage to your vehicle in the event of a covered accident with another vehicle or object. This includes:

  • A collision with another vehicle
  • A collision with a stationary object
  • An accident that involves rolling or falling over

Comprehensive insurance pays to repair or replace your car that’s stolen or damaged by something other than collision. This includes:

  • Theft and vandalism
  • Fire
  • Natural disasters
  • Falling objects
  • Damage from animals
  • Civil disturbance

If you were in an accident and the other driver was at fault, their insurance provider is responsible for paying your rental car bill. If you are at fault, your liability coverage will pay for the other driver’s rental car while rental car reimbursement coverage pays for yours.

Rental reimbursement coverage will not pay for a rental car if your vehicle is in the repair shop for general maintenance. It also doesn’t cover gas, mileage, additional insurance or any security deposit required by the rental car company.

To make sure you are not overpaying for car insurance, it’s free to check online through Credible’s partners and get a car insurance quote.

How much rental reimbursement coverage do I need?

How much rental car insurance coverage you need depends on the individual. Consider the cost of renting in your city and keep in mind that the cost for luxury vehicles or larger cars will be higher. Rental coverage also has limits, which is the maximum amount your insurer will pay for a covered claim.

For example, your rental insurance may have a limit of $25 per day up to 30 days or $750 per claim until your personal car is driveable again. If the cost exceeds the limit, you may have to pay out of pocket.

Although this car coverage is optional, the out-of-pocket cost of car rentals for a week could be hundreds of dollars. If you’re worried about the costly car insurance payments, rental reimbursement coverage is a low-cost add-on and typically costs only a few dollars a month.

Already have good car insurance but want to make sure you are alerted when you can get a better deal? Credible’s partner rental companies can send you free car rental insurance quotes if they find you a better rate.

Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at and your question might be answered by Credible in our Money Expert column.