How Loss-of-Use Coverage is Handled After an Auto Accident

There are different types of loss of use coverage depending on the type of insurance you have and the type of policy you are using. Homeowners will have a particular kind of loss of use coverage that allows you to get a hotel room or other residence if your home is currently uninhabitable after a flood or disaster. With your auto insurance loss of use coverage will be used after your vehicle becomes non-drivable after an auto accident.

There are a few different scenarios that would call for loss of use coverage and where the coverage would be taken from in your policy. Depending on the coverage you selected at the inception of your policy it may not be available to you. Here are a few examples of when and how loss of use coverage would apply after an auto accident and where the coverage would come from.

Ø You are in an auto accident that is your fault and your vehicle is rendered non-drivable and likely totaled. In this case you will need to have rental coverage on your policy so that you can rent a vehicle. If you do not have rental coverage you will likely not be afforded one by your insurance unless they make a rare special exception for you. Don't rely on it, rental coverage is only a few extra dollars per month and would be well worth it when you need it.

Ø You are in an auto accident that is not your fault and the other party has valid insurance coverage. Your vehicle is not drivable and you inform the other insurance company when they call to tell you that they have accepted responsibility for the accident. Your rental vehicle will be provided since you have lost use of your vehicle under the other party's liability coverage.

Ø You are in an auto accident that is not your fault and the other party does not have valid insurance coverage. This coverage could come from two different possible parts of your policy. If you live in a state that offers Uninsured Motorist Property Damage (UMPD) coverage it could be provided as a benefit of this coverage. If you do not live in a state that offers this coverage or you did not elect to have the coverage at policy inception you will need to have rental coverage on your policy.

It is very important that you inform your insurance company or the other party's insurance company of your need for a rental when you initially speak to them. If you do not you could be responsible for the early charges to your vehicle up until the point you informed them of your loss of use.