What is Loss of Use?
Compensation for the inability to use damaged property, such as a vehicle, during the time it is being repaired or replaced after an accident.
Understanding Loss of Use
Loss of use damages typically cover the cost of a rental car or, if no rental was obtained, the fair rental value of a comparable vehicle for a reasonable repair period. These damages are recoverable from the at-fault party's insurance. Some policies also include rental reimbursement coverage under the policyholder's own auto insurance.
Examples
- 1Rental car costs for 30 days while vehicle is being repaired
- 2Fair rental value of comparable vehicle when claimant did not rent
- 3Loss of use of commercial vehicle resulting in business income loss
Related Terms
Total Loss
When a vehicle is damaged to the extent that the cost of repairs exceeds the vehicle's actual cash value, or when the vehicle cannot be safely repaired.
Total Loss Threshold
The percentage of a vehicle's actual cash value at which the cost of repair causes the insurance company to declare the vehicle a total loss rather than repairing it.
Economic Damages
Compensation for financial losses that can be calculated with specificity, including medical bills, lost wages, property damage, and future expenses.
Diminished Value
The reduction in a vehicle's market value after it has been damaged in an accident and repaired, compared to a similar vehicle that was never damaged.
Reservation of Rights
A formal notice from an insurance company informing the policyholder that while they will investigate or defend a claim, they reserve the right to deny coverage or limit their obligations later.
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