Understanding 'Loss Of Use' In Auto Insurance Policies

Loss of use in auto insurance refers to the compensation a person receives for the time they are unable to use their vehicle due to accident damages and subsequent repairs. This typically covers the cost of a rental car, public transportation, or other reasonable transportation expenses. Loss of use coverage is not included in basic liability policies but is often included with collision and comprehensive policies. It is an optional, affordable addition to an auto insurance policy, costing only a few extra dollars per month.

Loss of use coverage is not included in basic liability policies

Loss of use coverage is an optional add-on to basic liability policies in auto insurance. It is not included by default. This type of insurance is designed to help you maintain your standard of living if you can no longer use an insured asset. In the context of auto insurance, loss of use coverage means that your insurance company will pay for substitute transportation costs, such as a rental car, if your vehicle is out of commission while undergoing repairs after an incident. This coverage can be very useful if you rely on your vehicle for daily commuting and other responsibilities, as it can save you from the inconvenience of being without a vehicle while yours is being repaired.

While loss of use coverage is not included in basic liability policies, it is typically not an expensive addition to your auto insurance. When adding this coverage to your policy, insurers will usually set their own coverage limits, such as a cap on the number of days or a per diem amount for the rental, like $50 per day. It's important to note that your insurance company will expect you to choose a reasonable rental vehicle that is comparable to the one you already own and insure. If you choose a luxury sports car as your rental while your more economical car is being fixed, for example, your insurance company may deny your loss of use claim.

It's also worth mentioning that loss of use coverage is not just available for auto insurance but can also be included in homeowners and renters insurance policies. In the context of homeowners and renters insurance, loss of use coverage, also known as additional living expenses (ALE) or Coverage D, helps pay for additional living expenses if you need to temporarily relocate due to your home becoming uninhabitable. This coverage ensures that you can maintain your standard of living while your home is being repaired or rebuilt.

Loss of use claims can be made if your vehicle is repairable or a total loss

Loss of use coverage is an optional add-on to your auto insurance policy that provides financial assistance for substitute transportation if your vehicle is out of commission while undergoing repairs after an accident. This coverage is designed to help maintain your standard of living and can be extremely useful if you rely on your vehicle daily.

If your vehicle is damaged in an accident but is repairable, a loss of use claim can be made to cover the cost of a rental car or other reasonable transportation expenses (such as public transportation or ride-sharing services) while your vehicle is being evaluated and repaired. This ensures that you are not left without a means of transportation during this challenging time.

In the unfortunate event that your vehicle is considered a total loss, meaning the damage is so extensive that it is not economical to repair, your loss of use claim will cover the duration until you receive compensation for the total loss. Once you are compensated for the value of your vehicle, your loss of use claim will typically end.

It is important to note that loss of use claims have certain requirements and limitations. Insurance companies usually set coverage limits, such as a cap on the number of days or a per diem amount for the rental. Additionally, you are expected to choose a rental vehicle that is comparable to your own, and unreasonable choices may result in your claim being denied.

The laws and regulations regarding loss of use claims vary from state to state. Some states allow loss-of-use claims even when a replacement vehicle is not rented, while others have specific rules and calculations for awarding damages. It is always a good idea to review your insurance policy and understand the specific coverage and requirements for loss of use claims in your state.

Insurers may deny loss of use coverage if they don't believe the damage was extensive

Loss of use is a legal term used to describe the compensation a person will receive for the period of time that they are without the use of their car due to damages sustained and the resulting repairs that need to be made. If your vehicle is damaged but repairable, your loss of use claim will be for the duration of time that you are without your vehicle while it is being evaluated and repaired. If your vehicle is considered a total loss, your loss of use claim will be for the duration of time that you are without your vehicle and waiting for compensation for the total loss.

In the event that your loss of use claim is denied, you can appeal the claim denial by submitting an appeal in writing to your insurance company. Explain your point of view, include supporting documentation, and request that the adjuster review the claim. You can also file a complaint with your state's department of insurance, as having the state insurance department on your side may give you some leverage in negotiations.

Loss of use coverage is typically included with collision and comprehensive policies

Loss of use coverage is an optional add-on to your auto insurance policy that provides financial reimbursement for temporary transportation costs while your vehicle is being repaired or while you are waiting for compensation for a total loss. This coverage is typically included with collision and comprehensive policies, which are also optional but commonly purchased.

Collision coverage reimburses you for the costs of repairing your car after a collision with an object (e.g. a telephone pole or guard rail) or another vehicle. It also covers damage caused by potholes. Comprehensive coverage, on the other hand, covers damage to your car caused by incidents other than collisions, such as natural disasters, theft, vandalism, animal damage, and fallen trees. Both collision and comprehensive coverage have deductibles, which are out-of-pocket expenses that the policyholder must pay before the insurance company starts covering the damage.

While collision and comprehensive coverage focus on repairing or replacing your vehicle, loss of use coverage is designed to help you maintain your standard of living by providing temporary transportation solutions. This could include a rental car, public transportation, or other reasonable transportation expenses. Loss of use coverage is not included by default and must be opted into, but it is typically not a costly addition to your policy.

In the event of an accident, you would first file a claim for the damages to your vehicle and the resulting repairs. Once you drop off your car for repairs, your loss of use coverage would take effect, providing reimbursement for your substitute transportation costs. It's important to note that insurance companies set their own coverage limits, usually by capping the number of days or setting a per diem amount for the rental. Additionally, they expect you to choose a rental vehicle that is comparable to your own in terms of make and model.

Loss of use coverage is a valuable addition to your auto insurance policy, especially if you rely on your vehicle for daily commuting and other responsibilities. By understanding what is included in collision and comprehensive policies and the benefits of loss of use coverage, you can make informed decisions about your auto insurance coverage.

Loss of use coverage can be claimed for public transportation costs

Loss of use coverage is an optional add-on to your auto insurance policy. It provides a "substitute vehicle or reimbursement for your transportation expenses" while your vehicle is being repaired or replaced. This includes the cost of renting a car, taking public transportation, or using taxis or ride-sharing services.

In Canada, there are three common types of Loss of Use forms: OPCF 20 for Ontario drivers, QEF 20 for Quebec drivers, and SEF 20 for drivers in Alberta and Atlantic Canada. Loss of use coverage typically costs between $60 and $80 annually and can be a valuable addition to your auto insurance policy if you rely on your vehicle for daily commuting and other responsibilities.

When claiming loss of use coverage for public transportation costs, it's important to keep in mind that there may be limitations. For example, your insurance company may expect you to choose a reasonable rental vehicle comparable to the one you already own. Additionally, loss of use coverage typically has a coverage limit, such as a maximum number of days or a per diem amount for the rental.

To make a claim for loss of use coverage, you will need to provide documentation such as rental car and/or transportation cost receipts, a police report detailing the incident, and proof of the condition of your vehicle prior to the collision.

Frequently asked questions