What Your Auto Insurance Covers for Rental Cars
Most auto insurance policies do not automatically cover rental cars. Whether a rental is covered depends on which part of your policy you're using and what happened to your own vehicle. If your car is damaged in a collision and you have collision coverage, that coverage typically extends to a rental car while yours is being repaired — but only if your policy includes rental reimbursement. If your car is stolen or damaged by weather and you have comprehensive coverage, the same rule applies.
The catch is that rental reimbursement is an add-on, not automatic. Many people discover this when they need it most. Your insurer will only pay for a rental if you purchased this extra coverage when you bought or renewed your policy. Even then, there are limits: most policies cover only a certain dollar amount per day (often $30 to $75) and a maximum total (often $900 to $1,500 per claim).
If you don't have rental reimbursement coverage, you still have options. Your credit card may cover rentals if you charge the full rental to that card. Some rental companies offer their own damage waiver. And in some cases, the other driver's liability insurance will pay for your rental if they caused the accident.
Key Takeaways
- Rental car coverage is an optional add-on to collision and comprehensive coverage, not included in a standard policy.
- If you have rental reimbursement, it covers only a set daily amount and total amount per claim, which you should know before you rent.
- Your credit card, the rental company, or another driver's liability insurance may cover a rental even if your own policy does not.
- You must tell your insurer about the accident or damage within the timeframe stated in your policy to use rental reimbursement.
When Rental Coverage Kicks In After an Accident
If you cause an accident and have collision coverage with rental reimbursement, your insurer will typically cover a rental car starting the day your vehicle is deemed unsafe to drive. This is not automatic — you have to report the accident to your insurer and request a rental. Most insurers will not pay for a rental you arrange on your own without approval first.
The rental must be a similar class of vehicle to your own. If you drive a sedan, your insurer will cover a sedan rental, not an SUV. If you rent something more expensive, you pay the difference. The daily limit applies to the actual rental cost, so if your limit is $50 per day and the rental costs $65, you pay the extra $15.
Coverage ends when your car is repaired and ready to pick up, or when the claim is settled if your car is declared a total loss. Some policies set a time limit — for example, 30 days — after which they stop paying even if your car is still in the shop.
Rental Coverage After Theft or Weather Damage
If your car is stolen or damaged by a covered event like hail, flooding, or fire, and you have comprehensive coverage with rental reimbursement, the same daily and total limits explore. You report the loss to your insurer, and they authorize a rental while your vehicle is being repaired or while the claim is being settled.
The timeline can be longer for comprehensive claims than collision claims. If your car is stolen, the insurer may wait a set period (often 30 days) before declaring it a total loss. During that waiting period, rental coverage may or may not explore — check your policy language. Once the car is declared a total loss, rental coverage typically ends, since you no longer own the vehicle.
What Happens If You Don't Have Rental Reimbursement
If your policy does not include rental reimbursement, your insurer will not pay for a rental car, even if the accident was not your fault. This is a common gap in coverage that catches people off guard. However, you have other ways to cover the cost.
If the other driver caused the accident and you file a claim against their liability insurance, their insurer may pay for your rental as part of the settlement. This process is slower — it can take weeks or months — and you may have to pay for the rental upfront and seek reimbursement later. Some rental companies will bill the other driver's insurer directly if you provide the claim number, but this is not may provide.
Your credit card may also cover rental cars. Many premium credit cards include rental car damage coverage if you charge the full rental to that card. Read your card's benefits guide or call the card issuer to confirm what is covered and what the limits are.
How to Add Rental Reimbursement to Your Policy
Rental reimbursement is added as a rider or endorsement to your collision or comprehensive coverage. You cannot buy it on its own. When you contact your insurer to add it, you will choose a daily limit and a total limit per claim. Common daily limits are $30, $50, or $75; common total limits are $900, $1,200, or $1,500.
The cost of adding rental reimbursement is usually modest — often $5 to $15 per month depending on your location and the limits you choose. It is worth adding if you rely on your car for work or have a long commute, because being without a vehicle can cost you more than the rental itself. If you have an older car that is paid off, the benefit may not be worth the cost.
You can add or remove this coverage at any time, though changes usually take effect on your next billing date. If you are in an accident and do not have the coverage, you cannot retroactively add it to cover that claim.
The Rental Company's Damage Waiver
When you rent a car, the rental company will offer you a damage waiver, sometimes called a collision damage waiver (CDW) or loss damage waiver (LDW). This is separate from your auto insurance and covers damage to the rental car itself. It does not cover your own vehicle.
If you decline the rental company's waiver and damage the rental car, you are responsible for the full repair cost. Your own auto insurance may cover this if you have collision coverage, but only after you pay your deductible. Many people buy the rental company's waiver for peace of mind, even though it adds $15 to $30 per day to the rental cost.
Before you rent, check whether your credit card or auto insurance covers rental damage. If either does, you may not need the rental company's waiver. But read the fine print — some coverage excludes certain types of damage or has a high deductible.
What to Do If You Need a Rental Car
Report the accident or damage to your insurer as soon as possible. Tell them you need a rental car and ask whether your policy covers it. If it does, ask your insurer for a list of approved rental companies — many insurers have partnerships that offer discounted rates. Do not rent from a company not on the list without asking first, as your insurer may not cover it.
Get written approval from your insurer before you sign the rental agreement. This protects you if there is a dispute later about what is covered. Keep all receipts and documents related to the rental, including the rental agreement, fuel receipts, and any damage reports.
If your insurer denies the rental claim, ask them in writing why. If you believe the denial is wrong, you can file a complaint with your state's insurance commissioner or pursue a dispute through your policy's appeals process.
Frequently Asked Questions
Does my auto insurance cover a rental car if I'm not at fault?
Your own insurance does not cover a rental based on fault. If you have rental reimbursement, it covers the rental regardless of who caused the accident. If you don't have it, the other driver's liability insurance may pay for the rental, but this takes time and you may have to pay upfront.
Can I use my auto insurance to rent a car for a vacation?
No. Rental reimbursement covers only rentals that result from an accident, theft, or other covered loss to your own vehicle. It does not cover recreational rentals.
What if the rental costs more than my daily limit?
You pay the difference out of pocket. If your limit is $50 per day and the rental is $70, you pay $20. To avoid this, rent a vehicle in the same class as your own car.
How long does rental coverage last?
Rental coverage lasts until your car is repaired and ready to pick up, or until your policy's time limit is reached — often 14 to 30 days. If your car is declared a total loss, coverage typically ends.
Can I rent a car while my insurance claim is being investigated?
Yes, but your insurer must approve it first. Report the accident and request a rental when ready. Do not rent without approval, as your insurer may deny the claim if you do.