The average number of car accidents in the United States is around 4 to 6 million accidents per year, which results in hundreds of millions of vehicle property damage alone. When a motorist negligently injures another person and causes them property damage, the injured person may seek to recover for both the repair or cost of the vehicle, as well as for the cost of being without a vehicle. “Loss of use” is essentially the legal phrase that is used to describe the damages that a plaintiff seeks for their inability to use the vehicle that was damaged due to the incident.
Therefore, if you have been involved in a car accident, and your vehicle has been damaged enough to be inoperable for a period of time, you may be able to file a claim for loss of use damages with your insurance company or in some cases against the negligent driver.
Loss of use coverage refers to a type of auto insurance coverage that may be included in a vehicle owner’s (also known as the “insured”) insurance policy that pays for a rental car or transportation costs, while an insured’s vehicle is being repaired.
Thus, in the event that an insured’s vehicle is damaged and their policy includes loss of use coverage, the insured may file a claim with their insurance company to provide for a rental or substitute vehicle, while their vehicle is being repaired.
Therefore, it is important to read through your insurance policy agreement to see if it includes loss of use coverage, as loss of use coverage is not automatically added to your policy.
Typically, loss of use coverage is not an expensive addition to a car insurance policy, and commonly only costs a few dollars extra a month. However, purchasing loss of use coverage for a business vehicle or fleet of business vehicles will be more expensive and involve a more complicated business insurance policy. Additionally, rental car insurance may also provide loss of use coverage.
Although it may seem obvious, you should file a claim for loss of use between the time of the accident and before repairs are completed on your vehicle, as this is the period in which you will require substitute transportation. In order to file a claim for loss of use with your insurance company you should meet the following requirements:
- You were operating and involved in a car accident in a vehicle that you owned, rented, or leased at the time of the accident;
- The vehicle was damaged enough to involve repairs, causing you to have to seek out substitute transportation for a period of time (some insurance companies do not offer loss of use coverage if the vehicle was totalled); and
- You were not at fault in the accident. However, some insurance policies allow for loss of use damage recovery and claims, even if the insured was fully or was somewhat at fault in the accident.
A loss of use claim made against your insurance company is referred to as a “first party” loss of use claim. In this situation the insured is the first party, making a claim against their insurance provider, the second party.
When filing a loss of use claim with your insurance company, it is important that you present your insurance company with all documents relevant to the accident and repair of your vehicle.
For example, you will want to present your insurance company with any accident report, invoices, quotes, or estimates for the repair of your vehicle, and any evidence of costs related to rental vehicles or substitute transportation.
Additionally, you should file your loss of use claim in writing to ensure that you have evidence of when you submitted your claim to your insurance company, should they fail to provide loss of use coverage on time or within a reasonable timeframe.
Thus, before filing a loss of use claim with your insurance company you should gather all of the aforementioned documents, in order to ensure that your claim is processed as soon as possible.
As noted above, the amount of money that you may recover from your insurance company or the responsible party from a loss of use claim depends on a variety of factors. However, typically loss of use claims are limited to a reasonable amount of money that it cost you to rent a vehicle or pay for other transportation, while you vehicle was being repaired. Unreasonable loss of use claims are commonly denied by insurance companies.
For example, if your compact vehicle had a market value of $5,000, then a reasonable substitute vehicle would be a similar compact car; whereas an unreasonable rental would be a luxury sports car or other expensive vehicle. Typically, your insurance policy will provide a per diem amount that you are allowed to use towards a rental vehicle, such as $50 per day.
There are many reasons that an insurance company can claim to deny payment for the loss of the use of your damaged vehicle. The most common reason that an insurance company will use to bar an insured’s claim for loss of use is that they were at fault in the accident. Further, most insurance policies do not provide coverage where there is evidence that the insured was driving recklessly or with gross negligence.
Other common reasons when a loss of use claim may be denied include:
- A loss of use claim that is deemed unreasonable, such as submitting a claim for reimbursement for a luxury or otherwise expensive rental vehicle will often be denied, as most insurance policies only provide for recovery of reasonable transportation expenses; or
- Claims for loss of use that are for long periods of time will often also be denied. For instance, some insurance policies limit the insured to recover for loss of use damages only for a set amount of time, such as thirty days;
- Your vehicle was completely totalled. As noted above, if your vehicle was completely totalled then your insurance company will likely be paying out the value of the vehicle, which will allow you to obtain substitute transportation quickly; or
- You either did not rent or cannot provide evidence of the costs you spent for substitute transportation or a rental vehicle.
Although not a requirement, as you may be able to file a loss of use claim with your insurance company on your own, an attorney would be beneficial in helping you promptly file your claim.
Additionally, an experienced insurance law attorney is especially helpful in situations where you believe that your loss of use claim is being wrongfully denied, or if you are unsure of how to file a loss of use claim.