Why You Need Rental Reimbursement Coverage

Auto accidents often result in damage that renders a vehicle temporarily undrivable. If your auto insurance policy doesn’t provide rental reimbursement coverage while your car is in the shop for repairs, you may be in a tough situation. 

Expenses add up quickly, with car rental costs averaging upwards of $50 per day in the United States. Understanding the coverages and limits included in your auto policy is a smart way to be prepared if you’re involved in an accident.

Why is renting a car so expensive?

Car rental used to be a reasonably affordable transportation option. When the COVID-19 pandemic hit in 2020, rental car companies anticipated reduced travel and sold off large portions of their fleets, creating an ongoing supply shortage. As travel returned to pre-pandemic levels, rental car companies were slow to rebuild their fleets. Consumers are now forced to pay higher rates to rent vehicles due to increased competition and fewer available options.

What is rental reimbursement coverage? 

Rental reimbursement coverage—also known as transportation expenses coverage—provides rental car reimbursement when your car is undrivable and undergoing repairs after an accident. Typically, you’ll receive a daily reimbursement amount based on the terms of your policy. 

Do I need rental reimbursement coverage? 

Unlike personal travel—which you typically schedule in advance—auto accidents resulting in the need for a rental car are unexpected. Normal life obligations, such as family transportation, personal appointments, and work, don’t stop because your vehicle is in the shop. Having rental reimbursement in place provides peace of mind by covering rental car costs while your vehicle undergoes any necessary repairs. 

Get insights like this right in your inbox. Subscribe to the Central Blog below.

Despite the importance of this coverage, rental reimbursement isn’t typically a top priority when purchasing an auto policy. Many auto policies offer limited rental reimbursement or no coverage, which policyholders may overlook.

How much does rental reimbursement coverage cost? 

Rental reimbursement is typically quite affordable to add to an existing auto policy. At Central, a common rental reimbursement option provides $50 per day, up to $1,500. Our Summit Auto Policy offers up to $1,500, and Signature provides up to $3,000, both offering greater flexibility with no daily limits. 

“Rental reimbursement provides peace of mind. When the worst happens, it allows you to continue your day-to-day routine without the added stress of an unexpected financial burden.”

Tali Helton, Central Insurance Product Manager, Personal Lines

How is rental reimbursement coverage different from rental car insurance? 

Rental reimbursement coverage differs from the insurance offered at the rental car counter. Whether or not you should purchase supplemental insurance is a personal choice. If you carry collision coverage under your auto policy, you may already have some coverage for a rented vehicle if you’re involved in an accident. Additionally, liability protection for property damage or bodily injury to others while driving a rental and coverage for damage to the rental vehicle itself is typically provided by the liability and physical damage portions of your automobile policy. 

Ready to hit the road? 

Check your policy or speak with an agent to review your current rental reimbursement coverage and options. 

The coverages described here are in the most general terms, and are subject to the actual policy conditions and exclusions. For actual coverage wording, conditions, and exclusions, refer to the policy or contact your agent.