“Loss of use” is a term included in nearly every rental car contract, tucked inside several pamphlet pages of tiny print that most consumers never take the time to read.
It means if you rent a car and get into an accident, you must reimburse the rental car company not only for the cost of fixing the car, but also for the lost revenue incurred every day the car is out of commission while it is being repaired.
“The reality is the rental car company is not able to rent that car while it’s out of service, and the rental car company is not at fault there,” explained Greg Scott, a public affairs representative for the American Car Rental Association (ACRA). “This isn’t a money grab. It’s simply making the rental car companies whole for the damage while the car cannot be in service.”
Loss of use wasn’t necessarily a big deal a few years ago. But it is now – thanks to the pandemic. That’s because a chronic car shortage means rental car prices have soared to record levels. And many body shops are backed up weeks – even months – waiting on parts.
So the days of a $30 a day rental car that could be fixed in a week are long gone. Under that scenario, if your $30-per-day rental car was damaged and required seven days in a body shop, a rental car company could charge you a $210 fee for loss of use.
But due to the pandemic, Brad’s rented Toyota Carolla cost $91 a day. And he knew it took 2-and-a-half months for a local body shop to make repairs to his own vehicle that had been rear-ended on the highway.
“I started doing the math and at $91 a day, that’s about $7,000 that I would have been liable for,” he said. “I literally could walk out of there, park my [rental] car on the street and some garbage truck runs into it while I’m asleep in my house, and all of a sudden I’m on the hook for $7,000. There’s an exposure there I don’t think most people are even aware of.”
And if you think your personal auto insurance policy will cover loss of use charges, think again.