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Loss of Use and Rental Car Claims

Part II

If you are entitled to be compensated for loss of use (rental), what terms would operate?

What kind of car are you entitled to and what terms do you have to follow?

Some states require the insurance carrier to provide you with basic transportation. Some require the same type of transportation you had. Some others require that this transportation be substantially the same to the one that you originally had.

If you are in a state where the insurance company can compensate a loss of use with basic transportation, then the carrier can use this as leverage against you.

Why? Because most state legislatures fail to define the term “basic transportation.”

The insurance company uses this to tell you that they can put you in the cheapest vehicle they can find.
If you do not like that, they can tell you that basic transportation means a “bus pass,” so you must accept a cheap rental car.

This is highly unfair and hopefully state legislatures will define this term for us soon.

Other states require insurance companies to give a rental car equal to the one you had when the accident happened.

This sounds fair enough, but again, the insurance companies have twisted the words to suit how they pay your loss of use claim.

When you rent a vehicle they will tell you that if you are in a sedan, then they will put you in a sedan.

If your car is an economy vehicle, then they will put you in one of those. But, they will only pay for the actual value of renting that car, the rental daily rate plus taxes.

They are giving you what you had, so they will not pay for extra expenses.

What extra expenses? These are the mileage, insurance, and any fuel.

Is this fair? Insurance adjusters will tell you that these are expenses that you had even before the accident occurred. You have to pay for insurance, wear and tear, and fuel.

What happens when the rental car company requires more insurance than the one you carry on your own vehicle? You would have to pay for extra insurance on this rental vehicle (rental companies offer this).

It does not matter that you are the victim. The insurance company will argue that this would have been your own cost anyway. You have to carry insurance on your own vehicle.

This “extra” insurance is called Collision Damage Waiver and it can be very expensive, close to $45 for every rental day in some places!

It is a shame that insurance companies use your loss of use claim to leverage against you.

If you do not carry full coverage in your policy (liability + collision + comprehensive), then you must pay for this.

I believe this is unfair because if you were not hit, then you would have your car and this fee would never exist. This is a direct damage from the accident and insurance companies should pay for that, but they will not.

The same theory applies to gas and mileage. If you have to travel to visit a sick family member out of town, then you must pay for the mileage.

It is also true that you would have some wear and tear on your vehicle, but not at a rate of 40 cents per mile! Again, it does not matter. Your insurance provider will not pay for that. And as far as gas?

We all have to pay for gas, but if the car you are renting gets worse gas mileage than the one you had, guess what? You have to pay for that.

A minority of states require insurance to substantially put you back in the position you were in before the accident. Montana is one of them.

If you are hit, then the insurance company must pay to put you in a car. It does not matter what they have to pay (insurance included), but they have to provide you with a vehicle.

If the vehicle was a milk truck, then the insurance company must compensate the rental car claim with a milk truck or its equivalent!

This system is fair. But even here, the fuel and mileage claims will be disputed by the insurance company.

Depending on where you are located, different statutes will apply and thus modifying the analysis above. 

The best way to find out what you are entitled to is to call the office of the insurance commissioner or the department of insurance.

Ask them what requirements and guidelines insurance companies must follow when providing you with a rental car.

They will outline the process and explain how charges for insurance, mileage, and fuel expenses apply.

A loss of use claim is not the only claim you can seek under this umbrella. If there was personal property that you were going to use but no longer could because of the accident, then you can seek compensation.

For example, my digital camera is damaged and I was going to be at my daughter’s graduation where I was going to take some pictures.

I can ask for my loss of use there. I lost the opportunity of taking the pictures. I cannot claim that I lost all the sentimental value and the utility lost from going to the event. I would be entitled to the value of renting a similar digital camera for the day.

I can go to the event and I can see my daughter graduate.

This is a different claim. If I was injured in such a way that I could not be present at the time, then I can make this claim under loss of enjoyment of life, but not under loss of use.

Any time you are making a loss of use claim you must be careful with mitigation of damages.

Regardless of whether or not you are making a loss of use claim against your own insurance company or some else’s, you have a duty to avoid a loss from getting bigger than it really is.

If the accident left you without a car, then you have a duty to figure out how to get to work.

You cannot claim your lost wages due to the inability to drive a car to work (you can claim lost wages if you were hurt, but not because of the lack of a car).

You had an alternative to ask someone to drive you there, or to rent a vehicle yourself and seek compensation later.

The same analysis would apply to the digital camera example above. I would have to mitigate my damages by buying a disposable camera or renting a digital camera.

The insurance company would have to pay for these costs.

Auto Property Damage Overview

Total Loss eBook

1. Insurance Vehicle Repairs
2. Can I dispute the adjuster's estimate?
3. Auto Claim with Prior Damages
4. My car is on fire! Fire losses
5. Auto Damage Estimate

6. Diminished Value Claims
7. Vehicle Total Loss Part 1
8. Vehicle Total Loss Part 2
9. Rental Car Claim and Loss of Use Page 1
10. Rental Car Claim and Loss of Use Page 2

11. Stereo Equipment Claim
12. Personal Property Damage Claim
13. Sentimental Property Damage Claim
14. Damage to Real Property Claims
15. Animal Loss or Vet Bills Claim

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