What is Loss of Use Coverage?
Often referred to as rental reimbursement, this important coverage is designed to bring you some stability after an accident.
What is loss of use coverage in auto insurance?
Loss of use, often referred to as rental reimbursement coverage, is a car insurance coverage option that steps in if your vehicle is rendered inoperable due to a covered loss. To obtain rental reimbursement coverage, you must first carry collision and comprehensive coverages on your car insurance policy and will only apply after a comprehensive or collision claim is made.Â
Insurance companies set limits on how long you may drive the rental car — typically per day and claim — while your own vehicle is being repaired. Let's explore how the coverage works, its cost and whether you need it in our handy guide.
What does loss of use cover?
If you need to use this coverage, the insurance company will provide a rental vehicle of like kind and model as long as the cost is agreeable with what your policy is willing to pay. If your SUV is being repaired, expect a similar make and model (an insurance company can deny your loss of use claim if, for example, you choose a luxury sportscar as your rental while your Corolla is getting fixed).
Policyholders can typically choose any rental car agency but most insurance companies have affiliate partnerships with specific rental companies; this allows for a more seamless process so that you don’t have to file for a reimbursement. Simply pick up and drop off the rental car within the time period specified on your policy.
You will be held responsible for the cost of gas and any deposits or fees charged by the rental car company for the duration of your rental period. If you select a rental agency of your choice, confirm that the daily rate is at or below your policy's rental reimbursement limit — when you file for reimbursement, this will be the maximum amount your insurer will reimburse, no matter the total cost of a rental car.
How loss of use coverage works
How the claims process plays out when a rental car is needed after a car accident is typically fairly straightforward. Keep in mind your experience may vary depending on the circumstances of the claim.
If you’re at fault
- File a claim with your insurance company to use your collision coverage.
- Get an estimate at a local mechanic or insurer-affiliated collision center.
- Drop off your vehicle and pick up the rental car.
- Return the rental when your car is repaired or you meet the coverage limit — whichever comes first.
If you’re not at fault
- File a claim with the at-fault driver’s insurance company; if the other party is slow to respond, there are delays, or if you need an immediate rental vehicle, you may need to file a claim with your own insurance provider instead.
- Get an estimate at a local mechanic or insurer-affiliated collision center.
- Drop off your vehicle and pick up the rental car; save any receipts and documents provided by the car rental company.
- Return the rental when your car is repaired or you meet the coverage limit — whichever comes first.
- Submit a claim for reimbursement, if required by the insurance company.
Fault has no impact on rental reimbursement coverage. If you carry the coverage, you are elligible for the rental car if your vehicle is rendered inoperable by the accident.Â
Nicholas Fernandez — Senior Manager of Agency at The Zebra
What are the costs and limitations of loss of use coverage?
Though it’s optional, rental reimbursement can be found at most insurance companies as it’s a popular coverage. It is difficult to calculate exactly how much extra you’ll pay for rental reimbursement — every insurance company is different — but the coverage typically adds between $2 and $15 per month to your premium. When you finalize your auto insurance policy, you’ll have the opportunity to choose the daily limit allotted for rental car coverage; this will determine the price added to your car insurance policy.
Below are common limits from some top insurance providers.
| Insurance Company | Rental Reimbursement Maximum |
|---|---|
| Allstate | $30-$100 per day |
| GEICO | $35-$50 per day, $1,051-$1,501 per claim |
| Liberty Mutual | $30 per day |
| Nationwide | $30-$500 per day, $900-$7,500 per claim |
| Progressive | $30-$60 per day, $900-$1,800 per claim |
| State Farm | $25-$50 or 80% per day, $600-$1,500 per claim |
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Do you need loss of use coverage?
For those who can afford the extra premium to have rental reimbursement coverage, it’s a great way to get the most out of your insurance for extra peace of mind during the oft-stressful claims process. But if you’re wondering if this optional coverage is worth it, there are a few questions to think about:
If you have quite a busy schedule in which a car is integral in your daily routine — for instance, chauffeuring your children around — being without a vehicle would throw a wrench in your lifestyle. Rental reimbursement may come in handy especially if you drive often, which increases your chances of getting into an accident.
The cost of car rental varies by location. Rental reimbursement may not be worth it if it’s cheap to rent a car through standard methods when your car is in the shop.
If you can commute to work via public transportation, rental reimbursement may seem unnecessary. However, public transportation expenses are often included as part of this coverage.
Above all, additional coverage like rental reimbursement should be affordable for your financial situation. If you’re unhappy with what you’re paying for auto insurance, shopping around and comparing quotes are your best bet in finding a cheaper rate. Enter your ZIP code below and let The Zebra guide you to savings.
You may have noticed that there is a loss of use section in your renters or homeowners insurance policy. With these insurance types, loss of use can also be called additional living expenses or Coverage D in insurance-speak. This coverage is baked into a standard policy, rather than an endorsement like the auto insurance option, and pays for your living expenses if your home or rental unit becomes uninhabitable due to a covered loss. Common expenses that can be covered include hotel stay, food, fuel, storage fees and more.
- In home insurance, the coverage limit for additional living expenses is typically 20% or 30% of your dwelling coverage limit, though this may vary based on the insurance company and policy. Learn more about loss of use in home insurance.
- In renters insurance, the common coverage limit is around $3,000 to $5,000 and is subject to your insurance company's stipulations on how it's allowed to be used. Learn more about loss of use in renters insurance.
Frequently asked questions: loss of use coverage
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About The Zebra
The Zebra is not an insurance company. We publish data-backed, expert-reviewed resources to help consumers make more informed insurance decisions.
- The Zebra’s insurance content is written and reviewed for accuracy by licensed insurance agents.
- The Zebra’s insurance editorial content is not subject to review or alteration by insurance companies or partners.
- The Zebra’s editorial team operates independently of the company’s partnerships and commercialization interests, publishing unbiased information for consumer benefit.
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