FAQs

Anytime a vehicle is damaged or totally destroyed, the question of a temporary replacement vehicle and who will pay for it always arises. Are you entitled to one at someone else's expense or not? The answers to these questions are not as simple as one might think. Because they are often complex is merely another reason to contact Gerald Livingston.

If you have "Rental Coverage" there is no deductible applicable to it. If there is damage to your vehicle or it is totally destroyed, and you paid a premium for "Rental Coverage" you are insured to a limited extent.

In Texas, "Rental Coverage" under your own policy usually is limited to reimbursement of $20.00 per day up to a maximum of thirty (30) days or six hundred dollars total, unless you have paid a special premium for greater coverage. Your vehicle has to be unusable for more than 24 hours because of damage or loss before your insurance company is obligated to begin to pay and it does not "Rental Coverage" does not apply to theft of the entire vehicle.

If a thief steals a radio from your vehicle and it is removed form use while being repaired and refitted, the rental will apply after 24 hours in the shop, but if the entire vehicle is stolen, rental does not apply. Lacking another vehicle, you will be walking or paying for your own transportation even though you have "Rental Coverage."

Many people confuse their need for a substitute vehicle after a collision with the responsible person's obligation to pay loss of "use" of the damaged vehicle that needs repair with one that has been totally destroyed.

Though it seems like rental that is paid by the insurance company of a responsible party, it is actually an element of the "Property Liability Coverage" claim against the person at fault in bringing about the loss. Payment of this element of a claim is not "Rental Coverage" in the sense that it is separately purchased coverage.

The obligation of a responsible person to pay for a substitute vehicle is based on the notion, that if a vehicle is damaged, but not destroyed, it will require time in a repair shop. During the time required for repair, the owner of the damaged vehicle is deprived of the value of its "use." Since the responsible person is liable for the repair, he is responsible also for the loss of use during repair or down time.

It is the reasonable value of the "use" of the particular damaged vehicle that is the actual element of damage which may be claimed.

Unlike "Rental Coverage" under your own policy which usually is limited to $20.00 per day for a period of thirty days, the obligation of a responsible party to pay for the "loss of use" of a damaged vehicle is not so limited, but depends directly on the amount of "Property Liability Coverage" he has to meet the basic vehicle damage claim and the number of vehicle claims involved in the incident.

The owner of the damaged vehicle is entitled to be paid the cost of renting a vehicle of the same quality as the one being repaired. If that is $20.00 per day, fine, but if more, then the owner is entitled to more. After all, the driver of a late model Lexus is not required to drive a KIA while his more expensive and luxurious vehicle is being repaired just to save the responsible person's insurance company money. You may have to argue a bit for it but usually you will get it.

If the responsible party's insurance carrier does not have sufficient funds under his "Property Liability Coverage" to pay for the necessary cost of "Reasonable Repair," and "Reduced Resale Value" of the damaged vehicle, then the owner may make a claim for the actual value of the "loss of use" of his vehicle under his own "Uninsured/underinsured Coverage" if he does not mind paying the deductible in the hope it will be returned to him in one year or he may elect to drive something that can be rented for $20.00 per day, if he has "Rental Coverage" on his policy and avoid any deductible.

The insurance company of a person responsible for the "Total Loss" of a vehicle unlike one that is merely damaged, will almost always agree to provide a rental vehicle for a short period of time even though strictly speaking the law in Texas may not require it.

Unlike a damaged vehicle which will require down time for repair, a private vehicle which is a "Total Loss" is not subject to a "loss of use" claim or at least not one that continues until the owner of the destroyed vehicle decides to purchase a replacement vehicle. It that were the case, it would be hard, if not impossible to get some people to ever buy a substitute vehicle.

Along this type of loss can be seen the argument for not paying "Rental Coverage" on a vehicle under one's own policy that has been stolen, but requires that the "Total Loss" be covered under "Comprehensive Coverage" which does not provide for vehicle rental recovery.

Good reasons exist, however, for the insurance company of a responsible person to agree to provide the owner of a destroyed vehicle with a rental vehicle for a short period of time even though strictly speaking it is not something that can be enforced.

It makes a good impression on the owner of the destroyed vehicle by convincing him the insurance company is his friend, cares about his situation and will do the fair thing by him. All of these reactions have a tendency to put the owner off the necessity of going to work early on his own appraisal of the destroyed vehicle much to his possible regret later on.

Of paramount importance in providing a rental vehicle, even a cheap one, even where it cannot be enforced, gives the insurance company a bigger bargaining advantage over an owner who lacks a substitute vehicle of his own, the funds necessary to rent one or to replace his destroyed vehicle immediately.

Such an owner, who is unprepared to for realistic negotiations over the price to be paid for his vehicle, will likely be told after the initial offer by the insurance adjuster to turn in the rental vehicle while he considers the offer made to him no matter how low or unfair it may seem to the owner.

This is raw economic leverage. If the rental vehicle is not turned in by the dead line date given to him by the adjuster, he will have to pay for any additional charges incurred and thus reduce his recover even more. But if it is turned in, he is deprived of transportation often necessary to get back and forth to work with the risk of more loss of money or even his job. These considerations are real incentives to take the insurance company's offer after a short time, like it or not. Remember it is all about money!

But, an owner who has done his homework in preparation for negotiations when the initial offer is made and is able to immediately and realistically counter or completely undermine the insurance company's offer with substantiation for a higher price, may well be able to keep the rental vehicle while the adjuster checks out the owner's evidence and perhaps reconsiders his offer. This is preparation and in most cases is leverage too.

If it can be avoided, it is never a good idea, to depend upon expected generosity of an insurance company of a responsible person or even your own to provide a rental vehicle any longer than is absolutely necessary. If the owner of a destroyed vehicle carriers "Rental Coverage" of his own, it may be used, if the responsible party's insurance company refuses reasonable rental of a substitute vehicle while negotiations continue or after it refuses to continue rental benefits.

Sometimes, it cannot be avoided, but where it can, hold out for the best deal to be in a better position to negotiate and hold out for bigger bucks where your evidence justifies it.

Remember if all else fails you can make your claim under your own "Rental Coverage" if you have it.

• Prev
• Next