You’ve been in an accident, and your car is either in the shop for repairs or declared a total loss. While the insurance company is focused on the damage to your vehicle, you’re focused on one critical thing: How will I get to work?
The inconvenience, cost, and stress of being without your primary transportation is a very real loss. This is where a Loss of Use Claim comes into play—a critical, yet often overlooked, part of your post-accident recovery.
What is a Loss of Use Claim?
“Loss of use” is the legal term for the compensation you can claim for the temporary inability to use your vehicle due to an accident that was not your fault. It is a claim for the damages you incur while your vehicle is being repaired or replaced.
This claim aims to put you in the same position you would have been in if the accident hadn’t occurred, ensuring you have reasonable alternative transportation.
The Two Main Scenarios for Loss of Use
Loss of Use damages are typically claimed in two scenarios:
1. Vehicle is Repairable
If your car is in the shop, the loss of use period covers the entire time you are deprived of your vehicle, which typically includes:
- The time it takes for the adjuster to inspect the damage.
- The time required to order necessary parts.
- The actual labor time needed for repairs.
2. Vehicle is a Total Loss
If your car is totaled, the claim period is generally defined as the reasonable time it takes you to receive your settlement check and purchase or otherwise secure a replacement vehicle. This period is not indefinite; courts usually consider what is a reasonable amount of time given market conditions and the complexity of the total loss claim.
How is Loss of Use Calculated?
For a claim filed against the at-fault driver’s insurance (a third-party claim), the calculation is usually based on the reasonable cost of a comparable vehicle.
Loss of Use = Reasonable Daily Rental Rate * Number of Days Without Use = $$
Key Factors in the Calculation:
- Comparable Vehicle: The daily rate used should be for a vehicle of like kind and quality to the damaged one. If you drive a mid-size SUV, the insurer is not required to pay for a luxury sports car, but they also can’t stick you with the price of a subcompact car.
- Actual Cost vs. Market Rate:
- If you rent a car: You can claim the actual, reasonable rental costs (including taxes and fees), so long as the vehicle is comparable.
- If you don’t rent a car: In many jurisdictions, you can still claim loss of use based on the fair market rental value of a comparable vehicle for the period you were without your car, even if you borrowed a friend’s car or used public transit.
Crucial Tip: Save every receipt and document every step. Keep records of your rideshare costs, public transit fares, and the rental agreement for your temporary vehicle.
Don’t Let the Insurer Shortchange Your Claim
Insurance companies have many tactics to minimize a loss of use payout:
- Lowballing the Daily Rate: They might offer a fixed, low daily rate that does not reflect the true cost of renting a comparable vehicle.
- Limiting the Time Frame: They may try to cut the claim period short, arguing the repairs should have been completed faster or that you took too long to replace a totaled vehicle.
- “No Rental, No Claim” Myth: They may incorrectly tell you that you must provide a rental receipt to be compensated. In many states, this is false.
If your vehicle is out of commission due to someone else’s negligence, you have a legal right to be compensated for the full, reasonable period of your loss of use. Be proactive, document everything, and don’t accept the first low offer.
Are you currently dealing with an insurance claim? Reach out to Acquire Auto to get help immediately.
