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rental car insurance using loss of use coverage

What Is Loss Of Use On My Auto Insurance Policy?

We rely on our vehicles on a daily basis to get us from point A to point B. If we lose access to this vehicle for a period of time it can make our lives more difficult. If you have ever been in a car accident and your vehicle requires repairs you might know the feeling. But did you know there is an optional coverage you can carry on your insurance policy that provides you with a rental car if your vehicle is being repaired as a result of a claim. It’s true! That coverage is called OPCF 20 Loss of Use.

What Is OPCF 20?

OPCF 20 or the loss of use coverage provides you with a temporary vehicle replacement if your vehicle is damaged by an insured peril and you have the coverage on your policy. That’s right, the Loss of Use coverage is not automatically added to an auto insurance policy you need to purchase it separately. With most companies in order to qualify for the coverage you also need to carry physical damage coverage on your vehicle (collision and comprehensive coverage). You can then choose to add it onto your policy for a fee.

With the loss of use coverage you can choose to rent a car, take public transit or use a cab or ride sharing service.

How Much Does Loss Of Use Cost On My Insurance?

The rate you pay to carry loss of use coverage on your policy varies from carrier to carrier. Typically for a standard policy the amount would be $40-$80 for the year. You can choose to increase the amount of coverage you carry so you can rent a more expensive vehicle (if it is similar to your actual vehicle) or use it for a longer duration but this will also increase the amount of premium you spend per year. The best way to find out is ask your broker about different options and find one that makes sense for your auto policy and your budget.

Without loss of use coverage on your policy, if your vehicle is involved in an accident or damaged from an insured peril you will be responsible for your own method of transportation until your vehicle is repaired. This can become quite costly.

How Long Does The Loss Of Use Coverage Last?

This is a great question and we are glad you asked! There are a few different ways this can vary.

#1 Your Coverage Limit Has Been Reached

The amount of coverage you have varies from company to company.

You can choose to buy different limits with most carries who offer a dollar value on the coverage. If you drive a luxury vehicle and want to ensure your replacement vehicle can also fit the bill you may choose to purchase a higher limit. If you do not care about the type of rental car you may purchase a $2,000 limit for your loss of use coverage. This means that if you need a rental car you can use up to $2,000 to rent a vehicle while your vehicle is being repaired. Once that $2,000 is reached you may be responsible to pay for the rental car out of pocket.

Other companies do not offer a dollar amount instead they use a time frame. They allow you to use the loss of use coverage for 30 days once your vehicle is in for repair. This means if your vehicle takes longer than 30 days to repair you may be responsible to pay for the vehicle replacement beyond that time frame.

#2 Your Vehicle Has Been Repaired & Is Ready For Pickup

Even if you still have time or money left in your coverage as soon as your vehicle is repaired and ready for pickup your insurance company will make arrangements to return the rental car and get you back in your vehicle.

#3 You Have Received A Total Loss Settlement

In certain cases your vehicle may be damaged beyond repair. In this case the insurance company will deem this a total loss. Typically, your insurance company will pay you out right away so you can purchase a new vehicle. However, in a few cases that time frame for getting paid can take a little while and this is when you will be able to use your loss of use coverage. As soon as the settlement has been made the insurance company will make arrangements to return the rental vehicle.

Can Anyone Use Loss Of Use Coverage?

For drivers under the age of 25 there may be some limitations based on the rental car agencies. If you are under the age requirement the loss of use coverage can still be used for alternate modes of transportation such as public transit or taxi/ride sharing. In some cases drivers under that age may feel it is more beneficial to not purchase the coverage and save the premium every year. And that is why having the advice and expertise of a broker is important for young drivers!

The final note on the OPCF 20 loss of use coverage is that the coverage does not cover gas or any regular vehicle costs that you would need to pay for with your own vehicle.

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