Rental Coverage and Loss of Use

Automobile insurance policies typically provide rental coverage on an optional basis, with the insured choosing the amount per day up to a maximum. ($30/day up to a $900 limit is common.) When a covered auto suffers a “loss”, the insurer will pay according to the policy, “the expenses you incur to rent a substitute vehicle”. Rental coverage is generally not paid where the vehicle is stolen (a “total theft”) until 48 hours after the theft.

The insurance policy limits the time it will pay for a rental to the time reasonably necessary to repair or replace the damaged vehicle. Since this is a first party coverage, not governed by statute, an insured’s options are controlled by the policy language. The determination of what time is reasonable for a rental vehicle depends on the facts of each claim.

Disputes with regard to rental reimbursement coverage arise when the time a rental is reasonably required is not agreed between an insured and insurer, or when the make and model of rental car chosen by the insured, or insurer, is not acceptable. These matters are generally resolved short of litigation, as the amount in controversy is not worth the insurer’s time or expense to litigate. On the other hand, and insured who prevails in a claim based on a rental coverage dispute is entitled to recover attorneys fees and costs.

Court Rules That Insurers Must Replace Luxury With Luxury
Atlanta Journal-Constitution (09/21/10) Paul, Peralte

Fred Anderson sued Allstate Insurance Co. following a months-long dispute over how much he was owed for the temporary loss of use of his $60,000 Audi Q7 when a motorist insured by the company crashed into the vehicle in April. A DeKalb County (Ga.) Magistrate Court judge last week ordered Allstate to pay Anderson $8,200, or $200 for each of the 41 days Anderson's luxury SUV was being repaired. Allstate's initial offer was $125.75 to cover a car rental for the five days its claims adjuster said the repairs would take to complete. The ruling puts a spotlight on how Georgia courts interpret a state statute that addresses how such loss-of-use claims ought to be handled. The courts have found that statute means an at-fault insurance company has to give the other party enough in auto rental coverage to pay for the use of a vehicle equal to the one being repaired. Other states interpret it that way as well. In 2009, Montana's insurance commissioner sent a memo to all insurers in the state saying loss-of-use damages meant getting enough in rental coverage to get a vehicle similar in value and quality. Georgia's statute does not concretely define what constitutes a reasonable loss of use, leaving it to the discretion of judge and jury. "The statute limits recovery in requiring the benefits to be ‘reasonable,' which could include any number of factors that a judge or jury would like to consider," says J. Stephen Berry, a partner at McKenna, Long & Aldridge who specializes in insurance law. "The statute does not specifically address whether plaintiffs are entitled to the rental of a ‘comparable' car, but Georgia's courts have interpreted the statute that way."   How will the Florida courts rule when presented with this issue?

The following infromation appears in the Florida Department of Financial Services "Insurance Library":

Auto Claim - Rental Car (Delay or Refusal)

Note, the at-fault person's insurance policy must provide at least the State mandated $10,000 in property damage liability coverage, the source for paying all claims for damage to property of others, loss of use and diminished vehicle value.  Recovery beyond the at fault person's "PD" coverage would have to be against the at-fault party personally.  (Recovery against an insurer for damages which exceed the available insurance policy limits may be made if the insurance company, in adjusting the claims, acts in "bad faith", which generally is not found in the adjustment of property damage claims.)