What Is Loss of Use in a Rental Car Accident?
Loss of use in a rental car context is the charge that a rental company imposes on the at-fault party for every day the damaged vehicle is out of service being repaired. During that time, the rental company cannot rent the vehicle. Loss of use compensates the company for that lost rental revenue.
How is loss of use calculated?
Rental companies calculate loss of use based on the daily rental rate for that vehicle class multiplied by the number of days the vehicle is out of service, minus any documentation of actual lost revenue if the vehicle had been rented. Many states require rental companies to demonstrate that the vehicle would have been rented (actual utilization rate) rather than billing at the full theoretical daily rate. The actual loss of use charge in a real accident can range from a few hundred to several thousand dollars depending on vehicle class and repair duration. For example, a compact sedan rented at $50 per day that needs two weeks of bodywork could generate a $700 loss-of-use bill on top of the repair invoice.
What covers loss of use?
Standard personal auto policies exclude loss of use. A personal collision claim for the rental vehicle’s physical repair does not extend to cover the rental company’s loss of use claim.
CDW/LDW products from the rental company typically include loss of use protection – but only when the CDW is not voided (it is voided if an unauthorized driver was operating the vehicle, if the vehicle was used off-road, or if other exclusions apply). For example, if a friend borrows the rental vehicle without being added as an authorized driver and causes a collision, the CDW is voided and the entire loss-of-use bill falls to the renter.
Several premium credit cards include loss of use in their rental vehicle benefit. Chase Sapphire Reserve (primary coverage up to $75,000) and Chase Sapphire Preferred (primary coverage up to $60,000) both name loss-of-use charges as an explicitly covered expense in their benefit terms. Capital One Venture X’s primary Visa Infinite benefit covers loss of use as part of coverage up to the actual cash value of the rental vehicle, for vehicles with an original MSRP up to $75,000. The American Express Platinum’s built-in Car Rental Loss and Damage Insurance (CRLDI) covers loss of use as secondary coverage up to $75,000. For primary coverage on Amex, the optional Premium Car Rental Protection (PCRP) upgrade covers loss of use: $19.95 per rental for the Basic plan (primary, up to $75,000) or $24.95 for the Plus plan (primary, up to $100,000), for rentals up to 42 consecutive days.
When does loss of use become the renter’s personal liability?
If CDW is voided and the renter has no credit card coverage that includes loss of use, the renter is personally responsible for the charge. This is a gap that catches many renters off guard – the physical repair bill is visible at the time of the accident, but loss-of-use billing often arrives weeks later, after the vehicle is returned to service.
Does my car insurance cover a rental car in Georgia?
What CDW covers and when it is voided
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