Loss of Use Insurance: Why Most People Don’t Have Enough Coverage in Today’s Market

When your car is in the shop after an accident, you expect your insurance to cover the cost of a rental car. That’s where Loss of Use coverage—also called Rental Reimbursement—comes in. But here’s the problem: with today’s skyrocketing rental car prices, most drivers have nowhere near enough coverage to get by.

What Loss of Use Coverage Really Does

Loss of Use is an optional coverage you can add to your auto policy. If you’re in an accident (and it’s a covered claim), it reimburses you for the cost of a rental car while your vehicle is being repaired. Coverage is usually listed as a daily limit and a maximum number of days.

For example:

$30/day, up to 30 days → maximum payout $900
$50/day, up to 30 days → maximum payout $1,500

That might have been enough years ago… but not anymore.

The Rising Cost of Rental Cars

Over the past few years, rental car rates have surged due to supply shortages, higher operating costs, and increased demand. In many cities, a basic sedan can cost $60–$100 per day—and that’s before taxes, fees, or insurance add-ons from the rental company.
If your coverage is capped at $30/day, you’ll be paying the difference out-of-pocket—sometimes hundreds of dollars more than expected. Worse, if your repair takes longer than 30 days (not uncommon with today’s parts delays), you could run out of coverage before your car is ready.

Why Underinsurance is So Common

Old limits, new prices: Many people selected their coverage years ago when $30/day was sufficient.
“Set it and forget it” policies: Rental coverage isn’t something most people think about until they need it.
Repair delays: Even a simple fender-bender can mean weeks without your car due to parts backorders and labor shortages.

How to Protect Yourself

Check your current limit. Look at your policy’s daily and total rental reimbursement amounts.
Compare with current rental prices in your area. Make sure your daily limit is realistic.
Increase your coverage if needed. The difference in premium is often just a few dollars per month.
Consider the total maximum. A higher daily limit helps, but you also need enough total days to cover extended repairs.

The Bottom Line

Loss of Use coverage is one of those “small” policy details that can make a huge difference when the unexpected happens. With rental car prices at all-time highs, now is the time to review and update your limits—before you’re stuck paying out-of-pocket for weeks on end.

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