What is Rental Car Reimbursement?

September 27, 2023

If you’ve gotten into an accident and need your car repaired, you might be unable to drive for painfully long…unless you’ve protected yourself beforehand with rental reimbursement coverage, a savior for those willing to move fast across the city and beyond under any circumstances.

Read on to learn everything you need to know about rental reimbursement coverage.

What Does Rental Reimbursement Cover?

Rental car reimbursement usually covers rental and transportation fees (bus or taxi rides, trains, etc.) by issuing a daily payment of a determined amount. Everything else – for example, repair delays or gasoline – is excluded.

  • For example, you may get $50 daily and have a per-claim limit of $950 and a specific limit for the number of days you are eligible for the payment.

What are the Conditions?

Rental reimbursement only applies if you are forced to use alternative transportation due to damages sustained in an accident covered by collision or comprehensive coverage. These policies will typically have a deductible, whereas rental reimbursement won’t.

Whether the collision was your or the other driver’s fault, you are still entitled to reimbursement if you have it covered on your policy.  You don’t qualify for transportation expenses compensation if your vehicle is being serviced for wear and tear or is undergoing maintenance.

How Does Rental Car Reimbursement Work?

What Is Collision Coverage 4

You are free to pick what company to rent a car from, although certain insurance providers have partnerships with particular rental car agencies.

  • If your insurer is partnered with your rental car agency, the agency can bill your insurer directly. 
  • If your insurer is not partnered with your rental car agency, you must pay for the rental car upfront and then submit a reimbursement claim to your insurer.

To better understand the prices and conditions of rental car reimbursement coverage, we advise you to look through our list of top rental car reimbursement insurers:


Allstate reimbursement comes in conjunction with comprehensive or collision coverage. The monthly rate is affordable, usually around $4 to $10, with a daily payment limit of $30 and a $900 reimbursement limit.

Allstate requires that third-party claimants pay for the rental upfront and then send them a copy of the car rental receipt to be reimbursed after returning the rental car.


Progressive’s rental reimbursement coverage costs less than $10 a month, with a daily limit of $40 to $60 and a $900 per-claim limit for transportation expenses. To be eligible for Progressive’s rental reimbursement addendum, you must have comprehensive and collision coverage on your policy. 

You will have to cover the rental costs out of pocket before Progressive reimburses you according to your spending and coverage limits.

Progressive grants a 5% discount on its rental reimbursement coverage if you rent with Enterprise, one of the leading car rental companies in the United States.


Geico rental reimbursement has a daily limit of $25 to $50 and is paid out for up to 30 days. If you’re renting from Enterprise, Geico will be billed directly by the rental company.

You have the freedom to pick any rental agency. You might have to pay the fee upfront if you choose a company other than Enterprise, but Geico will refund you up to the limits of your rental reimbursement insurance.

If I Don’t Have Rental Coverage, Can I Still Get Reimbursed for a Rental Car While My Car is Being Repaired?

Your insurance company will not compensate your rental expenses if you don’t have the required coverage or bought it after the accident. However, you can get the at-fault driver’s insurance company to reimburse you if the at-fault driver admits their fault.

However, if the at-fault driver doesn’t have enough coverage, you may have to pay hundreds of dollars out of pocket. According to Statista, around 25% of all drivers are underinsured or uninsured.

Rental Reimbursement VS Loss of Use

Loss of use is a decent alternative to rental reimbursement, as it also coveted the expenses due to losing access to your car while it’s being repaired. Loss of use may even include loss of income (if you need your car to make money), but most companies only provide a fixed daily payment.

The amount of loss of use compensation is based on how much it would cost to rent a similar car until your car is repaired or replaced. In other words, the more expensive the car, the higher the amount of loss of use, up to the policy limits. In reality, though, the daily amount for loss of use compensation is usually around $30, just as much as rental reimbursement usually provides.

Loss of Use Compensation in Case of a Total Loss

If your car is determined to be a total loss, your loss of use coverage will cover your expenses until you get paid for the total loss.

Which One Should I Get: Rental Reimbursement or Loss Of Use Compensation?

Rental reimbursement is better for daily car use, for example, if you commute using your car or get your kids to school. It’s especially convenient if your insurer is partnered with a rental company, as then you don’t have to pay out of pocket before you get reimbursed.
Loss of use is better if you have multiple vehicles or don’t need to drive every day, which makes it reasonable to decline the rental offer from your insurer in favor of loss of use.

What is Rental Car Reimbursement? 2

Oleksandr Rohovnin is a Content Marketer at Phonexa.com and an expert contributor to CoverExplore. His passion is digital marketing, innovative technologies, tech industries, and – above all – distilling vast amounts of complex information into engrossing narratives anyone can relate to. At CoverExplore, Oleksandr stokes passion for auto insurance and the automotive industry in general in every story he curates.


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