Loss of Use vs. Rental Reimbursement: What California Drivers Need to Know After an Accident

Many drivers are surprised to learn that loss of use and rental reimbursement aren’t interchangeable. Even though both involve being without your car after an accident, they operate in very different ways. Car accident laws in California can be rather confusing, especially with insurance terminology you may be unfamiliar with.

In this article, we’ll discuss some of these terms to help you understand the differences, how insurance companies use them, and what they mean for securing the compensation you’re entitled to. 

What Is Loss of Use?

In simple terms, loss of use is the legal right to be compensated for the time you can’t use your car after an accident. It’s considered a damage claim, not something you buy as part of an insurance policy. This typically comes into play when another driver is at fault, and you’re seeking compensation from their insurance company.

Loss of use covers the value of not having your vehicle—regardless of whether you actually rent a car. That’s the part most people don’t realize: you can still claim compensation even if you borrow a car or simply wait it out.

For example, let’s say you drive a Toyota Camry and it’s in the shop for 10 days. A similar rental costs about $40 per day in your area; even if you don’t rent a car, the at-fault driver’s insurance may still owe you $400 in loss-of-use damages.

What Is Rental Reimbursement?

Rental reimbursement—sometimes called rental car reimbursement, rental reimbursement insurance, or simply rental reimbursement coverage—is optional insurance you can add to your own auto policy. It helps pay for a rental car when your vehicle is being repaired after a covered accident.

Coverage varies, but most California policies include $30–$50 per day, with a maximum of around $900–$1,200 total. Unlike loss of use, this coverage only applies if you actually rent a car.

Rental reimbursement can apply even when you caused the accident. So if you’re waiting on repairs after a crash that was your fault, this coverage can save you from having to pay for a rental entirely on your own.

Loss of Use vs. Rental Reimbursement: What’s the Difference?

Even though both revolve around being without your car, here’s how they differ:

	Loss of Use	Rental Reimbursement
Who Pays the Cost	The at-fault driver’s insurance.	Your own insurance pays—only if you bought the coverage.
Whether You Need to Rent a Car	Payment is based on the value of the loss, not whether you rent.	You must rent a car to receive reimbursement.
How the Amount Is Determined	Uses the fair market daily rental rate for a comparable vehicle.	Capped by the daily and total limits in your policy.
When They Apply	sually applies when you’re not at fault.	Applies regardless of fault, as long as the accident is covered under your policy.

It’s also important to know that while you can benefit from both loss of use and rental reimbursement coverage, you can't collect both at the same time. But figuring out which days and amounts apply can get complicated, which is why working with an experienced attorney is essential.

Need a Personal Injury Attorney in North Hollywood or Burbank?

After a car accident, transportation becomes a major issue—especially in California, where public transit isn’t always practical. Knowing the difference between loss of use vs. rental reimbursement helps you avoid paying unnecessary costs.

Since 1998, Yepremyan Law Firm has helped thousands of clients throughout Southern California. To ensure you’re compensated fairly, contact us today to schedule a consultation. Our personal injury law firm in North Hollywood provides 24/7 support and offers free case evaluations.

Consult with our car accident lawyer in North Hollywood to explore your legal options. Additionally, you can request to speak with a personal injury lawyer in Burbank who can guide you through the process and advocate for your best interests.

*No Legal Advice Intended. This website includes general information about legal issues and developments in the law. These materials have been prepared for general informational purposes only and are not intended to be legal advice. Please consult an attorney for legal advice pertaining to any particular legal matter. Use of and access to this website or any of the links or resources contained within the site do not create an attorney-client relationship between the reader, user, or browser and Yepremyan Law Firm and any of its attorneys, employees, or associates.