Does auto insurance cover rental cars? (2026 Coverage Guide)

Does auto insurance cover rental cars? Your personal insurance should cover any rental cars you drive if you have full coverage.

Additionally, you must have rental reimbursement coverage on your policy to have your insurance pay for a rental car while your vehicle is being repaired. This add-on typically costs extra, and only applies if your car is in the shop after a car insurance claim.

Read on to know when your auto insurance covers rental cars and what you can do to reduce costs when you need to rent a car. To see rates from top auto insurance companies in your area, enter your ZIP code into our free quote tool.

Does my car insurance cover rental cars?

Generally, if you carry full coverage car insurance, it transfers to any rental car you drive, depending on your provider.

Below are examples of when coverage kicks in while driving a rental:

• Accidents
• Acts of nature, such as floods, tornadoes, and hurricanes
• Falling debris, such as hail or tree limbs
• Theft
• Vandalism
• Fire or smoke damage
• Animal damage, such as hitting a deer

However, a liability insurance policy typically doesn’t include rental cars, as it only covers injuries and damages to others.

Reading over your policy and understanding auto insurance coverages will help you determine when a rental is covered.

Read More:

• What is the cheapest car rental company?
• What happens if I don’t agree with the amount the insurance company is offering me for repairs to my vehicle?

Rental Car Insurance vs. Rental Car Reimbursement Coverage

Rental car reimbursement coverage is different from rental car insurance. Rental reimbursement coverage helps cover the cost of a rental car while your vehicle is in the shop following an accident or other claim.

Rental Reimbursement Coverage Limits by Provider

On the other hand, rental car insurance covers you when driving a vehicle from a rental agency. It often includes liability, collision, and other optional coverages that pay for damage or injuries if you get in an accident while driving the rental.

Adding rental car coverage to your policy costs extra, but it’s generally less than renting a car for one day. Including rental car reimbursement on your policy is an inexpensive way to ensure you always have a ride without waiting on another insurance company.

Also, rental reimbursement coverage has specific limits. If you choose a more expensive vehicle or need the rental for longer than a month, you’ll have to pay any additional costs out of pocket.

Each car insurance company handles rental car coverage differently. Some pay the rental car company directly, while others require you to pay upfront and then reimburse you.

Some companies may also partner with rental car companies that directly bill your auto insurance company to reduce or eliminate your out-of-pocket costs. However, going out of network means that you’re responsible for all rental car costs.

Rental car reimbursement coverage is not typically included in a standard insurance policy. Instead, it’s an optional add-on that costs extra, and not all insurers offer the coverage. Most insurers also require you to carry full coverage to add rental reimbursement.

Many insurers, including State Farm-approved auto body shops near you and those offering nationwide rental car insurance, offer policies that cover car rental while a vehicle is being repaired. This ensures you have a rental car while the car is in the shop, allowing you to maintain your routine without interruption.

In addition, rental reimbursement coverage has limits. So if you choose a more expensive vehicle or need the car for longer than a month, you’ll have to pay any additional fees for your rental out of pocket.

Some insurers also allow you to use public transportation, taxis, and rideshares with the coverage. Check with your car insurance company to see if you have rental car reimbursement coverage and learn how to use it.

Learn More: Can I get a rental car while my vehicle is being repaired?

When Auto Insurance Won’t Pay for a Rental Car

Car insurance pays for a rental car if your vehicle is getting repaired from a covered loss. However, don’t expect your insurance to pay if you need a rental car for another reason.

Examples of when car insurance doesn’t cover rental cars include:

• Vacation
• Routine maintenance, such as oil changes 
• Mechanical breakdowns, such as engine repairs
• You don’t have car rental insurance coverage on your policy

If my car breaks down, will insurance cover a rental? No, insurance only covers rentals if your vehicle needs repairs from a covered claim, such as an accident, fire, or vandalism.

Do you need rental car reimbursement?

Although the cost of rental car reimbursement is typically low, it’s still an added expense. Removing unnecessary coverages is a great way to lower your auto insurance rates. 

Keep in mind that you may not need rental car reimbursement coverage at all. For example, you can skip coverage if you have another car you can drive while yours gets repaired.

Additionally, if you can use public transportation, borrow a friend’s car, or get rides from others, you don’t need the additional cost of rental car coverage.

Insurance Companies That Cover You When Your Car Breaks Down

No insurance company offers policies that pay for routine maintenance or mechanical breakdowns. However, a few providers offer mechanical breakdown insurance (MBI) to lower rates and repair costs for older vehicles after a breakdown.

The most popular auto insurance companies for mechanical breakdown insurance are:

• AAA
• Allstate
• American Family
• Geico
• Mercury

Each company offers different features with their policies, as well as deductibles. While some offer free towing or rental cars, others provide lower deductibles or roadside assistance.

Read More:

• What is American Family’s policy on rental car coverage during the claims process?
• Does my auto insurance cover towing and roadside assistance?

AAA Mechanical Breakdown Insurance

AAA Mechanical Breakdown Insurance provides roadside assistance and financial relief for costly maintenance repairs, but it does not cover rental cars after a breakdown.

There are no deductibles at AAA-owned repair shops. At AAA-approved mechanics, the deductible is $50.

However, you must be a AAA member to buy AAA auto insurance. AAA membership packages range from $59-$119 per year.

Read More: Does AAA cover rental cars?

Allstate Extended Care

Allstate Extended Care also comes with a cheap $50 deductible and covers the powertrain, core systems, and technology in your vehicle. It also gives drivers the luxury of choosing their own mechanic.

Allstate will also cover a rental car after a breakdown for up to $40 per day for 7 days and up to $100,000 of towing costs after a breakdown. However, Extended Care is limited and only applies for 7 years or 100,000 miles.

American Family ForeverCar

An American Family ForeverCar subscription will cover a rental car after a breakdown for up to $40 per day. Coverage also applies to up to 225,000 miles and includes a wide array of mechanical and powertrain repairs.

Drivers can choose their own mechanic and their own level of coverage, with additional platinum and powertrain coverage levels for extra protection.

Geico Mechanical Breakdown Insurance

Does Geico cover a rental car if my car breaks down? No. Geico MBI policies only cover repairs to mechanical parts of your car, but it will cover all those mechanical parts. Read our Geico car insurance review for more information.

Unfortunately, Geico has the highest MBI deductible on this list at $250.

You will also need rental reimbursement for Geico rental car insurance to apply during an MBI claim.

Mercury Mechanical Protection

Mercury Mechanical Protection offers some of the most extensive breakdown coverage, including rental coverage, roadside assistance, and trip interruption coverage. Drivers can also choose their own mechanic no matter what state they are in.

What to Know About Auto Insurance for Rental Cars

Insurance covers rental cars if you have the right policy. Rental car reimbursement is a feature you can add to your policy that pays for a rental if your vehicle gets damaged under a covered claim.

Most policies don’t automatically include the feature, and it makes your rates increase. However, rental car reimbursement is typically inexpensive. You can add or remove the coverage at any time.

Rental car reimbursement doesn’t cover a rental for vacation, routine maintenance, or if your car breaks down. Additionally, you might not need the coverage if you have another vehicle to drive, can take public transportation, or can get a lift from someone else.

Read More: Can I get a rental car while my vehicle is being repaired?