What most car owners don’t realize is that if they were not at fault for the accident and didn’t need a rental while the car was in the body shop – they’re still entitled to get a check for Loss of Use.
When a car owner calls the at-fault insurance company, the largest auto insurance companies usually ask them if they need a rental (although some smaller companies do not). The car owner thinks “Wow, the insurance company is so nice. They’re really taking care of me!” And while that’s true to a degree, let’s see what happens when the car owner has other means of transportation and says “Oh, no, thank you.”
Nothing! That’s right – nothing happens. And that’s where the trick is. The friendly adjuster on the phone does not say “Oh, that’s OK, we’ll still write you a check for Loss of Use because you’re entitled to it anyway”, and that’s where many American drivers are leaving hundreds or thousands of dollars on the table.
What is Loss of Use?
Loss of Use is a simple claim that the car owner is entitled to after a not-at-fault accident. The idea behind LOU is that because of bad driving of the at-fault party the car owner loses use of their vehicle while it’s in the body shop being repaired. And it doesn’t matter if the car owner actually needs a rental or has other means of transportation – they are entitled to compensation for Loss of Use regardless because they’ve lost use of their vehicle. Like Diminished Value and repair cost, Loss of Use is a type of a Property Damage claim, and is covered under the Property Damage portion of Auto Liability policies.
The compensation for Loss of Use can take the form of the at-fault insurance company paying for your rental by issuing a payment to the car rental company or issuing a payment to you directly. Insurance companies prefer to offer a rental vehicle because they have discounted deals with car rental companies but when dealing with at-fault insurance, the car owner can choose to get a check instead.
How Much am I Owed for Loss of Use?
At Tiger DV people occasionally ask us for a “Loss of Use Appraisal.” There is no such thing because the Loss of Use calculation is extremely simple.
Loss of Use Amount = Days in Body Shop x Daily Rental Rate for Same-Class Vehicle
To make this even easier, let’s use a real example of our client, Ryan. Ryan didn’t need a rental, and that’s where that was going to end until we let him know that he was still entitled to Loss of Use compensation. Ryan has a Jeep Grand Cherokee that spent 5 days at the body shop. Jeep Grand Cherokee is in the Premium SUV class.

Now, all we need to do is go to a reputable car rental website and see the Daily Rental Rate for a Premium SUV class vehicle.
After going to Enterprise and selecting one day rental, we see that our relevant Daily Rental Rate is $131/day. So we calculate the Loss of Use as follows.
Loss of Use Amount = 5 Days x $131/day = $655
Ryan is entitled to make a Loss of Use claim for $655, money he had no idea he deserved.
How to Claim Loss of Use From the At-Fault Insurance
We recommend including the LOU claim as an item in your Demand Letter. We provide a Sample Demand Letter to all of our clients for claiming Diminished Value but any kind of a reasonable claim can be added to the same letter. In the Demand Letter you should include the simple LOU calculation and a screenshot from the car rental website. That’s all!
What if I Do Need a Rental Car?
There are a few things to keep in mind so you don’t get taken advantage of.
First of all, you have three options to get a rental car.
- You can use your own insurance policy’s Collision coverage.
- You can use the at-fault insurance’s Liability Property Damage coverage.
- You can rent on your own and send a bill to the at-fault insurance.
Each option has its advantages and disadvantages.
Using Your Own Insurance
Your own insurance will get you into a rental quickly but their rental will have significant limitations which are set in your policy. Often, you won’t get the vehicle for as much time as you need or you won’t get a vehicle of the same class. Yes, that means that you will be short-changed on your Loss of Use compensation but because you agreed to the terms of your policy and its rental limitations – this is legal. If you used your own insurance for a rental, and didn’t receive full LOU compensation – you should claim the difference from the at-fault insurance.
Let’s go over an example and use Ryan’s Jeep again. Let’s say Ryan needed a rental and went through his insurance. Proper LOU compensation would be for 5 days with a Premium SUV class vehicle for a total of $655. Let’s say that his own insurance only let him rent an Economy class vehicle for 4 days with a total value of $228. In this case Ryan is entitled to make an LOU claim with the at-fault insurance for the difference of $427.
Using At-Fault Insurance
You can use the at-fault insurance for a rental but you may run into a similar issue of insurance trying to provide a lower class vehicle or for a shorter period of time than is appropriate. Legally, your own insurance is allowed to set limitations on your rental according to your policy while the at-fault insurance must provide full Loss of Use compensation for every day you’re without your vehicle, and the vehicle must be of the same class. That doesn’t mean that the at-fault insurance won’t try to provide a lower class vehicle for less time than you deserve – they probably will. So if you need a rental urgently, and don’t have time to argue, it’s probably best to use the rental from your own insurance and later claim the difference from the at-fault insurance.
Renting Directly
Renting directly has the benefit of making sure that you will get a vehicle of the same class and for as long as your damaged vehicle is in the body shop. You will also have access to a wide selection of makes and models across multiple rental companies – so you can find and rent something you really like rather than be limited to the few choices the insurance company’s car rental partner offers you. And, it’s faster because you can go immediately to the rental company of your choice without first making arrangements with insurance. Of course, the downside is that you will need to cover the rental cost out of pocket first, and then send the bill to the at-fault insurance for reimbursement. If you’d like to get fully compensated for your rental, make sure not to rent a vehicle of a higher class than your damaged vehicle and not to keep renting after your vehicle has been released from the body shop.