What Is Loss of Use Coverage in Auto Insurance?

After an accident or other insurable event, your car may need days or even weeks in the shop. During that time, you're still responsible for getting to work, appointments, or picking up your kids. That’s where loss of use coverage comes in—it helps cover your temporary transportation costs while your vehicle is being repaired or replaced due to a claim.

This matters when you're thinking about what happens after a collision or theft. You might think about this the next time you're considering optional coverages or recalling how disruptive a car repair once was.

What Loss of Use Covers

Loss of use coverage, sometimes called “rental reimbursement,” helps pay for reasonable transportation expenses while your vehicle is out of commission due to a covered event. It typically applies if your claim involves:

A collision
Whether the accident was your fault or not, if your vehicle is damaged in a crash and you’ve made a collision claim, this coverage can help pay for a rental car while repairs are made.
Theft of the entire vehicle
If your car is stolen and you’re without a vehicle for several days or longer, your policy can reimburse you for a temporary rental or alternate transit costs.
Damage from a covered comprehensive peril
If your vehicle is in the shop due to fire, vandalism, a falling tree, or storm damage, this coverage can help you stay mobile during repairs.

Covered transportation costs may include:

Rental car fees
A standard rental vehicle provided while your car is being repaired or replaced, up to your daily and total policy limits.
Public transit or taxi fares
If you don’t want a rental or live in an area with good transit access, your coverage may pay for buses, trains, or cabs.
Ride-share services like Uber or Lyft
Many insurers will reimburse for ride-share use, especially if it’s used in place of a rental car, as long as receipts are provided.

Type of Expense	Is It Covered?
Rental car after an accident	Yes
Taxi fare to work while car is in repair	Yes
Ride-share after hailstorm damage	Often (check with insurer)
Long-term upgrades (e.g. luxury rentals)	No (limited to reasonable cost)

How It Works

If you’ve added loss of use coverage to your policy, here’s what typically happens after a covered loss:

You report your claim and the insurer confirms coverage
Once it’s established that your claim is valid—such as after a collision or theft—your rental or alternate transportation costs become eligible.
Your vehicle is assessed and sent for repair
The insurer evaluates the damage and authorizes repairs, triggering the timeframe during which you’ll be without your car.
Your loss of use benefit kicks in
You may be directed to a preferred rental agency, or be reimbursed for alternative travel—subject to policy limits.
Coverage ends when repairs are done or your vehicle is replaced
You’ll be covered up to the limit of your policy or until your car is ready—whichever comes first.

Most policies have a daily maximum (e.g., $50/day) and a total maximum (e.g., $1,000 per claim).

Note: You will need to pay any costs that exceed these limits out of pocket.

When It’s Worth Adding

Loss of use coverage is relatively inexpensive and often worthwhile if:

You rely on your car daily and don’t have a backup vehicle
If you don’t have access to a second car or a household member’s vehicle, this coverage prevents you from being stranded.
You live in an area with limited public transit
In rural or suburban regions, transit options may be minimal, making a rental car essential during repairs.
Your car is valuable or repairs may take longer
Vehicles that are newer, imported, or require specialty parts may stay in the shop for an extended period, increasing your need for alternative transportation.

Caution: This coverage won’t apply if the damage wasn’t part of a covered claim. For example, it won’t help if your engine fails or your vehicle is in the shop for routine work.

A Small Add-On That Preserves Your Daily Routine