Does Insurance Pay for a Rental Car While Your Car Is Being Repaired?

Key Takeaways

• Rental reimbursement is an optional add-on to your auto policy — it is not included by default, and many drivers only discover this after an accident.
• According to the Insurance Information Institute, the average car spends about two weeks in the shop after an accident. Renting a replacement for that long can easily cost several hundred dollars out of pocket.
• The coverage is inexpensive — typically a few dollars per month added to your existing premium.
• If the other driver is at fault, their liability insurance usually pays for your rental car (a "third-party loss of use" claim) — you do not need your own rental reimbursement coverage for that.
• Rental reimbursement has daily and per-claim caps. Know your limits before you pick up the keys.

What is rental reimbursement coverage?

Rental reimbursement — also called rental car coverage or loss-of-use coverage — pays for a rental vehicle while your own car is being repaired after a covered accident. It is an optional endorsement you add to a policy that already includes collision and comprehensive coverage, because those are the claims that trigger it.

As the Insurance Information Institute notes, this coverage is available for a nominal extra amount with almost every auto insurance policy, but it is often bypassed by drivers shopping for the lowest premium. That decision can be costly: if your car is in the shop for two weeks, a mid-size rental at market rates can easily run $500–$700 or more.

Some policies also allow you to use the daily benefit toward rideshares, taxis, or public transit if a rental car is not practical — check with your insurer.

How does it work?

After a covered loss (a collision, a comprehensive event like hail or theft, or any other claim your base policy covers), you contact your insurer and either:

• Use your insurer's direct-billing arrangement with a partner rental agency — you pick up the car and your insurer pays the agency directly, up to your daily limit. This is the easiest path.
• Rent from any agency yourself and submit receipts for reimbursement. Make sure the daily rate does not exceed your policy's daily cap, or you will pay the difference.

Your policy sets two limits: a daily cap (commonly in the range of $40–$70 per day, depending on your insurer and the tier you selected) and a per-claim cap (either a maximum dollar amount or a maximum number of days — often 30 days, sometimes 45). Once you hit either limit, the remaining rental costs are yours.

Rental reimbursement typically has no deductible of its own. However, the underlying collision or comprehensive claim that triggered it does carry your regular deductible.

What if the other driver was at fault?

When someone else causes the accident, you have two paths to a rental car — and they are not mutually exclusive:

• Third-party loss-of-use claim: You file against the at-fault driver's liability insurance. Their insurer is generally obligated to provide you with a comparable rental vehicle (not a luxury upgrade) while your car is being repaired. You do not need your own rental reimbursement coverage for this — the at-fault driver's policy pays.
• Your own rental reimbursement (if you have it): Fault investigations can take days or weeks. If you do not want to wait, you can use your own rental coverage immediately and let your insurer recover the cost later through subrogation.

This is one of the most practical reasons to carry rental reimbursement even if you are a careful driver: it lets you get a rental car right away instead of waiting for the other insurer to accept liability.

What happens with a total loss?

If your vehicle is declared a total loss, rental reimbursement typically covers a rental for a "reasonable period" to find a replacement vehicle — but that period is limited by your policy's per-claim cap. Once the total-loss settlement is paid, most policies stop the rental clock shortly afterward (often within 48 hours of payment).

This can create a squeeze: if the total-loss negotiation drags on, you may run out of rental days before you have a settlement check. To protect yourself:

• Ask your insurer on day one how many rental days your policy allows and when the clock starts.
• If the delay is caused by the insurer's own valuation process, ask whether they will extend coverage — some will.
• Start shopping for a replacement vehicle before the settlement is finalized so you are ready to move quickly.

What rental reimbursement does NOT cover

• A rental while your car is in the shop for routine maintenance or mechanical breakdown — only covered losses trigger it.
• Fuel, security deposits, or add-on insurance from the rental agency.
• Rental costs that exceed your daily or per-claim cap.
• A rental while you are on vacation or using a car for recreation.
• Costs above what a comparable vehicle would cost — upgrading to a luxury car is on you.

How much does it cost to add?

Rental reimbursement is one of the cheapest add-ons on a standard auto policy. Costs vary by insurer and coverage tier, but most drivers pay only a few dollars per month — far less than even a single day of renting a car out of pocket. Given that the average post-accident repair takes about two weeks according to the III, the math almost always favors adding the coverage.

How to file a rental reimbursement claim

1. Report the accident to your insurer and open a collision or comprehensive claim — rental reimbursement only activates alongside a covered claim. For the full process, see our guide on how to file a car insurance claim.
2. Ask your claims representative about direct billing. If your insurer has a partner rental agency, the agency bills your insurer directly — no out-of-pocket cost up to your daily limit.
3. Confirm your daily and per-claim limits before you pick up the rental. Choose a vehicle whose daily rate stays at or below your cap.
4. Return the rental promptly once repairs are finished or your total-loss settlement is paid. Days you keep the car after your vehicle is ready are not covered.
5. Keep all receipts if you are paying and seeking reimbursement rather than using direct billing.

Should you add rental reimbursement to your policy?

If you depend on a car to get to work, take children to school, or handle daily errands — and you do not have a second vehicle readily available — the answer is almost always yes. The cost is minimal, and the alternative is paying full market rental rates out of pocket during one of the most stressful periods after an accident.

The only drivers who can safely skip it are those with reliable access to a second vehicle or those who live in an area with strong public transit and could comfortably go without a car for a couple of weeks.