Which is better: Loss of Use or Rental Car Reimbursement Following an Accident?
If your car has been damaged in an accident, you’re entitled to recover Loss of Use or rental reimbursement. Which is better often depends on whether you have other transportation available. If you need a car for work, or getting the kids to school, etc., then renting a comparable car to your own and requesting rental reimbursement is a good option. On the other hand, if you don’t need a replacement car, then Loss of Use is a better option because you’re being paid for not being able to use your damaged car.
What is Loss of Use and how is it determined?
Loss of Use is a significant, and often overlooked, aspect of property damage in most car accidents. Generally, Loss of Use damages can only be made against the at-fault driver’s insurer. Damages for Loss of Use can be significant. New, luxury, or exotic cars, trucks, and RV’s can rent for hundreds of dollars a day. Loss of Use is determined by what a similar vehicle to yours would rent for during the time reasonably necessary to repair or replace your vehicle following an accident. Repairing these vehicles can take weeks and sometimes months to complete. If your vehicle’s comparable rent is $250 per day and repairs take 60 days, Loss of Use would be $15,000.
The best way to determine what a similar vehicle to yours would rent for is to go online and check the prices of rental car companies with similar vehicles to yours for rent or hire an appraiser. Next, multiply the per diem rate times the number of days reasonably necessary to repair or replace your vehicle.
What can I expect my insurance company to pay while my car is being repaired?
If your car is damaged in an accident and you have rental car insurance, your coverage is usually limited by a daily rate (e.g. $30 per day) and by the number of days a rental car is available (e.g. 20 days). Some rental coverage provides for Loss of Use as an alternative to renting a car, but again, coverage is limited by the terms of your insurance contract.
What can I expect to be paid from the at-fault driver’s insurance company?
Against the at-fault driver’s insurance, you’re entitled to recover either Loss of Use or rental car reimbursement which is not limited by a contractual daily rental rate or duration. Instead, you can make a claim against the at-fault driver’s insurance for the cost to rent a similar vehicle for the time reasonably necessary to repair your automobile.
If I have a rental car of lesser value, can I still request Loss of Use from the at-fault driver’s insurance company?
If your insurer provides a lesser quality rental car as a substitute, you’re still entitled to claim Loss of Use for your damaged vehicle against the at-fault driver’s insurer (less the cost of the lesser quality rental car). If the rental vehicle is similar to yours then Loss of Use would not apply.
What pitfalls should I avoid?
The main pitfall in collecting reimbursement for Loss of Use and Rental Car Reimbursement is delays in getting the car inspected and repaired promptly. You have a duty to ‘mitigate your damages.’ This means insurance companies are not obligated to pay for any delays you cause in getting your car inspected or repaired.