You can receive reimbursement for a rental car through your auto insurance policy after an accident, depending on who was at fault for the crash. If you were not at fault, you can pursue the other driver’s auto insurance to get a rental car. You’ll need to file a claim directly with the other driver’s insurance company, though.
If you were at fault for the accident, you can get a rental car if you have rental reimbursement coverage. It will usually cover you up to a daily limit. If you don’t have that coverage as part of your car insurance policy, you’ll have to pay for your own rental car.
This article covers:
- Who pays for a rental car after an accident?
- How long will insurance pay for rental cars after an accident?
- What is rental car reimbursement coverage?
- Should you buy rental car reimbursement?
Who Pays for a Rental Car After an Accident?
There are three possibilities for who pays for a rental car after an accident:
- The other driver’s insurance pays for your rental car
- Your insurer pays for your rental car
- You pay out-of-pocket
Ultimately, it depends on who was at fault for the accident. If you don't live in one of the no-fault states, fault is determined after witness statements, the police report and other evidence is considered by your insurance company. Once fault is determined, you can seek rental car compensation while your car is being fixed.
Follow these steps after an accident to establish fault and document everything for any insurance claims:
- Report the accident to the police
- Get the other driver’s insurance company information and phone number
- Photograph all damages
- Take down the contact information of any witnesses
If the other driver is at fault
If you were not at fault for the accident, the other driver’s insurance should cover the cost of your rental car. To claim this compensation, contact their insurance company immediately.
It can take some time for the company to admit liability, and you may need a rental car right away. In that case, consider contacting your own insurance company to seek reimbursement for you. However, your insurance company will only do this if you have rental reimbursement coverage on your policy. If you don’t have that coverage, you’ll have to pay for the rental car yourself, then be reimbursed later by the other driver’s insurer.
Make sure to keep any documentation and receipts for the rental car so you are compensated fairly.
The insurance company must offer you a reasonable rental car alternative while your car is being repaired. Reasonable expenses include:
- A similar rental car type to your own car. For example, if you require a large truck for work, and that is what was damaged in the accident, they need to compensate you with a similar car model. It would be unreasonable for the insurance company to offer a small car that can’t serve the same purpose as the car that was damaged. The rental car also must have similar worth to your own. For example, if your car is worth around $20,000, don’t expect to be reimbursed for a $100,000 luxury vehicle. The insurance company will pay for a car similar in value to yours.
- Coverage for a car for a fair amount of time. For example, if your car repairs take two weeks, you should be compensated for a rental car for that amount of time.
If you were at fault
If you were determined to be at fault for the accident, or if your car was damaged in a non-collision event, like theft, insurance will only pay for a rental car if you have rental car reimbursement coverage in your auto insurance policy. Otherwise, you will have to pay for the rental car out of your own pocket.
If you have rental car reimbursement coverage, you can arrange your own car rental and pay for it yourself, then get reimbursed. Or you can have your insurer arrange the rental for you. Having your insurance company arrange the rental is usually the better option. Insurers have relationships with major rental car companies like Enterprise and usually can get a cheaper rate. Also, it’s a smoother process for you if you don’t have to handle the paperwork and payments.
How long will insurance pay for a rental car after an accident?
There is usually a dollar amount cap on how much an insurance company will pay for a rental car after an accident. This could be a maximum dollar amount or a maximum number of days, which is typically 30, following the accident.
If your coverage is through rental car reimbursement, your insurer will pay for a rental car up to your policy’s claim limits and daily limits. For example, if your insurer offers $25 daily for up to $800, you will be reimbursed for your rental for 32 days.
Like any insurance coverage, rental car reimbursement added after an accident will not cover you for any incident that occurred before you add it.
How do you get rental car reimbursement coverage?
Rental reimbursement coverage is an optional coverage attached to your auto insurance policy that covers rental car costs while you wait for your vehicle to be repaired. You can't use rental reimbursement to cover routine maintenance or the use of a rental vehicle during vacation. Usually, you have the option to either rent a car and receive reimbursement later or let your insurance company arrange the rental.
Keep in mind, rental reimbursement coverage is different from rental car insurance.
You cannot purchase it retroactively, so if you’re in an accident that was your fault and you don’t have this coverage, you’ll have to pay for a rental car yourself. When the other driver is at fault for an accident, their coverage will pay for your rental vehicle.
Rental reimbursement coverage kicks in after you file a claim with your own auto insurance company, likely under your collision or comprehensive coverage. In most instances, you can only purchase this additional level of coverage if you have collision or comprehensive insurance. On average, adding rental car reimbursement coverage will cost you an extra $2 to $15 monthly.
Is rental car reimbursement worth it?
If you’re considering adding rental car reimbursement coverage to your auto insurance toolkit, you should look at several factors.
One thing you should consider is whether you would be able to pay for a rental car out of pocket if an accident happened. Of course, there’s no telling how long you’d have to pay for a rental car — it could be two days, or it could be a full month. If you don’t have much expendable income, you may want to add rental reimbursement coverage for a few dollars monthly to avoid paying a hefty amount out of pocket in the future. However, many drivers prefer putting that same amount into a savings account for an emergency fund.
For example, imagine your rental car reimbursement coverage costs you an additional $6.25 per month, and it costs $65 daily to rent a Honda Civic. If you needed a rental car for a week and you paid for it out of pocket, you would have to pay $455, which is around 73 months' worth of rental reimbursement payments.
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