Loss of Use and Rental Car

Waiting for your vehicle to be repaired after an accident can be aggravating and extremely inconvenient. Fortunately, under North Carolina law, if you have a property damage claim for your damaged vehicle, you may be entitled to the cost of renting a similar type and size vehicle for a reasonable amount of time while your car is being repaired. Generally, this is known as loss of use or rental car reimbursement.

Generally, loss of use or rental car reimbursement is the damage a person suffers from the inconvenience of not having their car after it has been involved in an accident. For example, Driver A is involved in an accident with an at-fault driver, Driver B. Driver A is the owner of his vehicle. Driver A has his car towed to an auto repair shop and it will take 20 days to be repaired. During those 20 days, Driver A is without a vehicle, in return, suffering a loss of use for that vehicle. Therefore, Driver A may be able to claim loss of use as damages, or receive compensation for a rental car from Driver B’s insurance company.

When can I claim loss of use and how much will I receive?

Generally, you may claim a loss of use of your vehicle when:

  • You are in an automobile accident
  • You are not at fault
  • The vehicle becomes unusable by you for some period of time
  • You suffer damages as a result

In general, the first three prongs are fairly straightforward to establish and prove to an insurance company or to a jury’s satisfaction; however, validating that you have suffered damages as a result can be a bit more difficult. Insurance companies will often refuse to pay for loss of use of your vehicle or claim that the losses are not as substantial as are being alleged. Usually, loss of use can be established by showing that you use your vehicle daily, and because of the accident, you no longer have a means of transportation to conduct your ordinary affairs.

If your vehicle has been damaged in an accident, you should aim to recover the reasonable value of a rental vehicle for the time that your damaged vehicle is being repaired. The reasonable value of a rental vehicle is considered to be the ordinary and customary cost of renting a comparable vehicle. Insurance companies will generally use the local or state average for a rental in determining how much they will pay per day for a rental vehicle of comparable value. Knowing this, it is always a good idea to try and get the insurance company to pay for the rental car directly or determine how much they are willing to reimburse. Ensuring that the insurance company is paying the rental car company directly will mean that you will not likely owe anything for your rental once it is returned. Let’s look at the following example:

Driver A is in an accident with an at-fault driver, Driver B. Driver A’s vehicle takes 20 days to repair. Driver A uses a rental car of comparable size and style that costs a reasonable $450 total for the 20 days. As long as the price is reasonable, Driver B’s insurance company should be responsible for paying the $450.

What if I did not rent another vehicle – can I still claim loss of use?

In some situations, it may be possible to recover the reasonable value of a substitute vehicle even if one is not rented. Generally, if you could have rented a vehicle, but borrowed or used another instead, you may still be able to recover for loss of use. Essentially, you can determine the amount you may be able to recover by calculating the reasonable number of days it will take to repair your vehicle (generally provided by the auto repair shop) and then multiplying that figure by reasonable rental costs in your area. You do not necessarily have to prove that you actually rented a vehicle.

Also, if the insurance company will not pay for the cost of a rental car because you borrowed someone else’s vehicle, then you may consider applying a measure of damages based on the mileage that you put on the vehicle you borrowed. You can do so by multiplying the Internal Revenue Service determined rate by the number of miles driven. The applicable rates can be found here.

What are the reasons a loss of use claim could be denied?

While every property damage claim is different and judged on a case-by-case basis, there are certain reasons, if applicable, that almost always mean your claim for loss of use will be denied. The three reasons provided below are the most common reasons for the insurance company to deny your claim for loss.

Failure to mitigate your damages

In almost all cases, you are obligated under the law to mitigate your damages, meaning you should attempt to not incur unnecessary expenses associated with your damages in order to be able to receive a full and adequate recovery. In other words, you required by law to minimize the effects and losses related to your property damage. In order to mitigate or minimize your property damage or loss of use, you must use reasonable care and due diligence to have your vehicle repaired in an appropriate and timely manner. This usually requires that you are always making some sort of progress toward having your car fixed. Thus, you need to choose a repair shop in a timely manner, usually within two or three days of the accident.

Moreover, you need to choose an auto repair shop that will be able to begin your repairs quickly. For instance, if you choose a body shop that cannot begin your vehicle repairs for a week or two, the insurance company will not likely want to cover that period of time for a rental vehicle. Therefore, you should shop around and choose the repair facility that can begin working on your car immediately. Be careful to ask the repair shop if they regularly work with the at-fault insurance company.

The repairs to the vehicle were not completed in a reasonable time

You must have your vehicle repaired within a reasonable time frame. If the length of the repairs is deemed unreasonable, then you may not receive compensation for a rental the entire time your vehicle is being repaired. Generally, these delays may include something like failing to make repair decisions, to sign proper documentation or to test drive your vehicle. Unfortunately, insurance companies will also try to avoid paying for any delays caused by the auto repair shop. These types of delays can range from a piece of machinery breaking down to an employee quitting.

Important Note: If there are delays that are not your fault, nor the fault of the repair shop, then the insurance company should still cover the full amount of your loss of use claim. These types of delays are rare and generally include things such as a national back order on all parts or a natural disaster in the area.

The vehicle was not repaired at all

If you fail to repair your vehicle, then you may not be able to claim a loss of use. This is due to the fact that you have failed to mitigate your damages by failing to have your vehicle repaired, and that you were never without the use of your vehicle. However, please note that this does not include when your car is ruled a total loss. Insurance companies will pay for a limited number of days for a rental when your vehicle is deemed a total loss. For total loss cases, the amount of time an insurance company will cover for a rental car will generally be the period of time it takes the insurance company to make a reasonable settlement offer and for the check to be sent to you. We recommend that you request that the rental car reimbursement cover the reasonable period of time it will take for you to locate and purchase a new vehicle if your vehicle is deemed a total loss. For more information about this, please read our article about Total Loss.

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