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What is loss of use car insurance coverage?

Accidents happen and it can, unfortunately, take time for your vehicle to be repaired or your claim settled. Loss of use coverage is designed to help you get around during that time in limbo. We’ll explain exactly what’s covered to help you decide if you need loss of use protection on your car insurance.  

Understanding loss of use car insurance coverage 

Loss of use is an add-on coverage to your car insurance known as an endorsement. This protection helps cover the costs of alternate transportation if your vehicle is involved in a covered claim. It can be used for: 

  • Rental vehicles 
  • Public transportation 
  • Taxi or ride-sharing 

How does loss of use coverage work? 

If your vehicle is involved in a covered claim, loss of use coverage provides funds to use towards alternate transportation such as a rental car or public transportation.  

Once you’ve opened a claim with your insurance company, they will discuss your loss of use of coverage with you. Generally, they’ll remind you of the loss of use limit and direct you to a partner rental agency if you require a rental car.  

Keep in mind the following: 

  1. Loss of use needs to be approved by your insurer (don’t assume you have coverage and always speak to your insurance company first). 
  2. There is a limit to your loss of use coverage. Once that limit is reached, you’ll pay the difference.  
  3. Gas, parking and other fees related to driving are not covered by your insurance.  
  4. Loss of use coverage only applies if the claim is covered. If the damage to your vehicle was caused by something that is not covered by your insurance, you won’t be able to use the loss of use coverage.  
  5. You may need to pay upfront and submit receipts for later reimbursement. 

Can I rent any car under loss of use coverage? 

You will be given a vehicle that is closest to the one involved in the claim. For example, if you drove a Mazda3, you’d be given a vehicle from the compact car category; if you drove a Ford F-150, you would receive a vehicle from the truck category.  

There are some cases where this won’t apply, such as if the rental agency is out of vehicles in that category. In this situation, you’d get another vehicle assigned to you.  

If you are given a choice, we always recommend going with the cheaper option to maximize the amount of time you can use it. The more expensive the rental vehicle, the more quickly your loss of use coverage is used up. 

How long do I have loss of use coverage? 

The amount of time you have loss of use coverage depends on several factors: 

  1. The limit of loss of use coverage you have on your policy. 
  2. The time it takes for your claim to be settled (for repairs to be completed or for the payout).  
  3. The cost of your alternative transportation.  

Loss of use will cover you until the limit is reached or your claim is settled, whichever comes first. How long that takes will depend on your individual situation. 

Do I need loss of use coverage for my car insurance?  

Loss of use is optional coverage. It helps reduce the financial impact of a claim, particularly if you can’t access public transportation or couldn’t afford to rent a car otherwise.  

Keep in mind that not all drivers are eligible to rent a vehicle. 

Do I qualify for loss of use coverage? 

In order to be able to add loss of use coverage to your car insurance, you will also be required to have any one of the following coverages on your policy: 

  • Specified perils 
  • All perils 
  • Collision 
  • Comprehensive 

How much loss of use coverage should I have? 

Insurers offer different levels of loss of use coverage. It depends on the cost of rental vehicles and how long your claim takes to be resolved as to how much loss of use coverage you should have. We generally recommend clients have at least $1,500 in loss of use coverage. This should cover a rental car for at least a week.  

Questions about loss of use coverage? 

Give us a call to discuss your car insurance with an experienced broker. They’ll help you understand the coverage and costs.