Rental reimbursement coverage

Rental reimbursement coverage pays for a rental car, or other transportation, while your car is being repaired or replaced after a claim covered by your comprehensive or collision coverage. It is an inexpensive add-on with two limits: a maximum per day and a maximum per claim. It does not pay when your car is in the shop for a breakdown or routine maintenance.

How it works

Rental reimbursement is sometimes called transportation expense coverage. State Farm, for instance, describes its Car Rental and Travel Expenses coverage as helping pay for a rental car or commercial transportation while your car is in the shop because of damage covered by comprehensive or collision (State Farm). The Texas Department of Insurance notes that some policies also pay for taxis or ride-hailing services.

The two limits look like "$40/$1,200" on a declarations page or ID card: up to $40 a day, and no more than $1,200 for the claim. State Farm explains that on its ID cards, the first number after the "R" is the daily maximum and the second is the total.

Typical limit options vary by insurer and state. Travelers says that in most states its lowest option is $30 a day up to $900 and its highest is $100 a day up to $3,000 (Travelers).

When coverage starts and stops

Policies differ, but State Farm's explanation is typical of how timing works:

• If the car cannot be driven after a covered loss, coverage starts right away.
• If the car is still drivable, coverage starts the day repairs begin and ends when repairs are finished or you reach your limit.
• If the car is a total loss, State Farm says you may have additional days of coverage from the date it reviews the vehicle valuation with you, still subject to your limits, so you have time to find a replacement.

Theft claims may also qualify, often after a short waiting period. Ask your insurer how long coverage lasts after a total loss settlement, because that window is often shorter than people expect.

What it does not cover

• Breakdowns and maintenance. No covered comprehensive or collision claim means no rental coverage.
• Gas, mileage charges and security deposits. Travelers lists these as not covered.
• The rental company's damage waiver or extra insurance.
• Costs above your limits. If you rent a bigger car or keep it longer, you pay the difference.
• Damage to the rental car itself, which your own collision and liability coverage usually handle. See accidents in a rental car: whose insurance pays.

If the other driver was at fault

When another driver causes the crash, their property damage liability owes you for reasonable loss of use, which usually means a comparable rental while your car is repaired. In practice, the at-fault driver's insurer may not approve a rental until it accepts liability, and it may limit the daily rate or the number of days.

Rental reimbursement on your own policy lets you get a car immediately through your own claim. If the other insurer later accepts fault, your insurer can seek reimbursement. It is one reason drivers keep this coverage even when they rarely cause accidents. See first-party vs third-party claims.

A worked example

Say a hailstorm damages your car and the shop needs 18 days to finish the repairs. You have rental reimbursement of $40 a day up to $1,200, and the only available rental costs $55 a day (all figures hypothetical).

With a $50-a-day limit, you would pay $90. If the repair dragged on for 35 days, a $40/$1,200 limit would run out after 30 days and you would pay the full rental for the last five. Insurers that have arrangements with rental companies, such as State Farm's with Enterprise and Hertz, may get lower rates than walk-in customers, which helps the daily limit go further.

How much to buy

1. Check local rental prices for a car you could live with, not a bargain rate you are unlikely to find on short notice.
2. Think about repair times. Parts delays and busy body shops can stretch repairs well beyond a week. See repair delays, parts shortages and running out of rental coverage.
3. Pick a daily limit near a realistic rental price and a total that covers several weeks.
4. Skip it if your household has a spare car, you can easily use transit or rideshare, or you carry only liability coverage. It pays only on covered comprehensive and collision claims, so it does nothing on a liability-only policy.

The premium for this coverage is usually small compared with comprehensive or collision; your quote or declarations page shows the exact cost.

Using the coverage

1. Ask about rental when you report the claim. Your insurer may reserve the car for you and bill the rental company directly.
2. Confirm the daily limit and number of days before you pick up the car.
3. Stay in touch with the shop about repair progress, and tell the insurer about delays.
4. Return the rental promptly when repairs are done; extra days are on you.
5. Keep receipts for any transportation costs if you are being reimbursed instead of billed directly.

Key takeaways

• Rental reimbursement pays for a rental or other transportation after a covered comprehensive or collision claim.
• It has a daily limit and a per-claim maximum; anything above them is yours to pay.
• It does not cover breakdowns, maintenance, gas or deposits.
• It gets you a car right away when the at-fault driver's insurer is slow to accept liability.
• Choose limits based on real local rental rates and realistic repair times.