If your car breaks down and the damage was caused by a covered loss, your auto insurance will pay for temporary transportation expenses as long as you have rental reimbursement coverage, which is usually a supplemental coverage option. Rental reimbursement coverage will cover the cost of a replacement rental car while yours is being repaired after a covered claim.
However, mechanical breakdowns and routine maintenance are generally not covered by auto insurance, and you should expect to assume the costs for regular wear and tear or corrosion. That means that if your car breaks down because of mechanical issues, even if you have rental car reimbursement coverage, it will not cover the cost of a replacement rental car.
Comprehensive coverage and collision coverage are additional insurance options you should add to your policy to protect the vehicle itself. And roadside assistance, which delivers emergency support if you’re stranded on the side of the road, can also help round out robust protection.
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When will insurance pay for a rental car?
If you have rental reimbursement coverage, your auto insurance will pay for a replacement rental car if your own breaks down or is in the shop due to a covered loss. A covered loss is a claim or incident that is covered under the terms in your policy. To find out what perils your policy does and does not cover, look at a copy of your policy or contact your insurance company. But generally, as long as rental reimbursement coverage is included in your policy, insurance will cover the cost of a rental car if your car is out of commission due to:
An accident with another car
Damage from extreme weather, like wind or hail
Damage from animals, like a mouse infestation or hitting a deer while driving
Damage from falling objects
Fire or smoke damage
What is rental reimbursement coverage?
Rental reimbursement coverage, also called substitute transportation coverage or car rental expense coverage, can help you pay for transportation expenses if your car is in an auto shop due to a covered loss. This can include public transportation fares or a replacement rental vehicle while yours undergoes repairs. But rental reimbursement does not cover rental vehicles for vacation purposes, and it won’t pay for a rental car during routine maintenance work on your vehicle.
Say you collide with an animal on the road. With comprehensive coverage, the costs of repairs to your vehicle would be covered, and because that counts as a covered loss, rental reimbursement would help you pay for a rental car while you wait for yours to be fixed.
Rental reimbursement coverage is optional, but it’s a relatively inexpensive add-on to your car insurance policy —including it generally won’t significantly raise your premiums.
Rental reimbursement coverage limits
Your rental reimbursement coverage will be subject to limits, meaning the maximum amount your insurer will pay per day for a covered claim. You’re typically given a daily limit and a maximum number of days it can be used, or an overall limit.
For example, your coverage may provide up to $25 per day for a maximum of 30 days or an overall payout of $1,000. That means your insurer will pay up to $25 per day for no more than 30 days or until your $1,000 limit has been reached.
If your rental car costs more than your rental reimbursement limit, or if you need to use it longer than the maximum days you’re allotted, you’d have to pay out of pocket for the costs that exceed your limits. Review your policy to see what your limits are, and speak to your insurer if you’d like to raise your coverage limits.
When will insurance not pay for a rental car?
Mechanical breakdowns and other regular maintenance issues are not covered by auto insurance, so you should expect to pay for mechanical repairs, like regular wear and tear and corrosion, on your own. Rental reimbursement will only cover the cost of a rental car if your car needs repairs after a covered loss. That means that the cost of a rental car will not be covered if yours is in the shop for:
Regular maintenance and repairs may be paid-for if your car is still under warranty, which is a guarantee made by your car’s manufacturer to cover the cost of certain mechanical repairs should you need them. Warranties typically last up to a certain number of miles or period of time, but are completely separate from your car insurance.
Car insurance that covers your vehicle itself
Liability car insurance covers damage to other people and their vehicles when you cause an accident. In all but two states, drivers are required to have the minimum amount of liability insurance, but the actual amount will vary by state. But there are types of coverage that pay for damage to your own vehicle.
Comprehensive and collision coverage are both optional, but will cover repairs to the body of your vehicle and are often paired together. Comp coverage pays for damage inflicted by non-driving perils such as theft, vandalism, animals, fire, and extreme weather conditions. And as the name suggests, collision insurance covers physical damage to your vehicle when it collides with another car or object, no matter who was at fault.
If your car is in the shop for damage that was covered by your comp and collision coverage, then your rental reimbursement will kick in and pay for the cost of a rental car.
Depending on your carrier, roadside assistance, another additional coverage option, can cover the costs of towing your car to an auto repair shop or delivering fuel or a new battery in emergency situations. If you have collision coverage and comprehensive coverage, then your policy may include roadside assistance; but if it does not, it’s fairly easy and affordable to add.