If my car breaks down, will insurance cover a rental? This is a common question many drivers ask their insurance providers. If you find yourself in a situation where you need a rental car because yours broke down and is in the shop, you might wonder if the rental reimbursement coverage you have on your policy will help pay for a rental. The short answer is no, because it is not a covered claim. Here is some information about how auto rental insurance works and what it covers.
What Is the Difference Between Rental Car Insurance and Rental Car Reimbursement?
There is a difference between rental reimbursement and rental car coverage. Rental reimbursement insurance is an added coverage many providers offer their customers. You can either purchase a policy that includes it or add rental reimbursement as extra coverage. For your rental reimbursement insurance to cover the cost of a rental, a breakdown must qualify as a covered insurance loss, such as that resulting from an accident. A mechanical breakdown is not usually a covered loss.
Rental car insurance differs from rental reimbursement because it is the insurance coverage that pays for damage to the rental, not the cost to rent the car. Your personal auto insurance policy will often have coverage that extends to a rental car, or you can purchase the car rental agency’s offered coverage. This added coverage is usually called a damage waiver. If you purchase this added coverage, the rental agency takes full financial responsibility for any damage to the vehicle.
How Does Rental Reimbursement Insurance Work?
If your car is damaged in an accident, natural disaster, or theft and requires repairs in a shop, you file a claim with your insurance company or the company of the person who is at fault for the accident. The insurance company will either pay the rental agency directly for a certain amount per day for the rental or reimburse you if you have to pay out of your own pocket.
Car Rental Insurance
If you have a personal auto insurance policy, it will typically cover damage to your rental if you get into an accident, just like it would cover your own vehicle. Before you rent a car, you’ll want to contact your insurance company to make sure your current policy covers the rental and verify you have enough coverage. Types of insurance you’ll need to protect yourself financially when driving a rental car include:
- Liability: This coverage will pay for damage to others’ property and bodily injury if you are found at fault for an accident.
- Collision: This coverage pays to repair or replace your vehicle if it is damaged in an accident or if you hit an object.
- Comprehensive: This coverage pays for repairing or replacing your vehicle if it’s damaged by an event other than an accident. This could be theft, hitting an animal, or weather events such as hail.
- Personal injury protection: This coverage pays for medical expenses for you and your passengers, regardless of whether you are at fault for the accident.
It’s important to know what your policy covers before renting a car. If you drive an older vehicle, you might not carry collision or comprehensive coverage because you don’t need it. If you decide to rent a high-end car and get into an accident, your insurance company probably will not pay for the damages because you don’t have enough coverage. In this case, purchasing the extra insurance coverage from the car rental agency would be a good idea.
What Is Rental Car Insurance, and What Does it Cover?
Rental car insurance is similar to a standard auto insurance policy. Most rental agencies offer a few coverage types, including:
- Loss damage waiver: A damage waiver is an added coverage that waives you of any liability if the rental is damaged or stolen.
- Personal accident insurance: This insurance covers the other driver’s vehicle and medical bills if you are found at fault for an accident.
- Personal effects coverage: This coverage pays for the loss of your luggage and other personal items during the time you rent the car.
When Is Rental Car Insurance a Good Idea?
If you don’t have insurance and rent a car, you’ll need to purchase at least liability coverage from the rental agency. If you only have liability insurance and get into an accident, you’ll be responsible for paying for damages to the rental car. Other reasons you might consider adding the extra coverage include:
- You’re only insured under a commercial policy.
- You have a high deductible on your personal policy.
- You rent a car overseas.
- Your current policy does not have enough coverage.
When Does Auto Insurance Not Cover Rental Cars?
Even if you have rental reimbursement, in some situations your rental reimbursement might not cover a rental. If your car is in the shop for the following reasons and you need to rent a car, you’ll have to pay for it out of your own pocket:
- Routine maintenance: Your rental reimbursement coverage does not pay for a rental when you bring your personal vehicle in for routine maintenance.
- Mechanical breakdown: If you need a rental because your car had mechanical problems and ended up in the shop, your rental reimbursement will not pay for it.
If your car is still under warranty or you purchased an extended warranty, the warranty coverage might pay for a rental when you bring your vehicle to the dealership for repairs. It’s important to note that warranties are completely separate from your auto insurance.
You have a lot to think about when renting a car. Knowing the difference between rental reimbursement and rental car insurance is important. If your personal car breaks down and you need a rental, you’ll have to pay for the cost of the rental, but your auto insurance policy will cover damages to the rental if you get into an accident.
At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.