When you are comparing auto insurance coverage plans, you may consider adding specialized coverage such as loss of use coverage, also known as rental coverage. Loss of use coverage is designed to reimburse you for additional expenses incurred when your car is lost, stolen or damaged, and you need to rent a car until you get your vehicle back.
Many people invest in loss of use coverage when they are very dependent on their vehicle and cannot afford to go without one in the event of an accident or emergency situation. Here’s a close look at how loss of use coverage works and why you may need to invest in this type of specialized insurance coverage:
How Loss of Use Coverage Works
Loss of use coverage is an optional insurance plan that makes sense for people who only have one vehicle available at any given time and do not have an alternative means of transportation. If you lose your vehicle during a collision or theft, or someone breaks into the car and you need to have it repaired, you will need to find alternative means of transportation until the vehicle is returned. Depending on the circumstances, you may be without a vehicle for several days, weeks or even months.
When you have loss of use coverage, you will file a claim when you no longer have access to your vehicle and proceed to rent a car, per your insurance company’s guidelines. Your insurance company will then be responsible for covering all costs related to the rental.
Reasons to Invest in Loss of Use Coverage
The primary reason to invest in loss of use coverage is so that you don’t have to pay for a rental car to get around until your car is repaired or your insurance company pays for a new vehicle. Processing insurance paperwork and finding a new vehicle can be a lengthy and complex process, and you will likely need a vehicle in the interim to go to work and run errands.
Most insurance companies require customers to rent a car that is comparable in value to their original vehicles, and may provide a list of acceptable vehicles and rental car providers. You may still need to pay some of the car rental fees upfront, but you will be reimbursed for all costs by a specified date.
Renting a car for an extended amount of time or purchasing extra insurance to drive someone else’s vehicle can be expensive. Loss of use coverage can be added to your existing auto insurance plan to cover the costs of a rental car until your vehicle is restored or returned.