What is Loss of Use Car Insurance Coverage? 2024 guide

Ever heard of loss of use car insurance? If you haven't, you've come to the right place.

Loss of Use Car Insurance steps in when your car is in the shop, covering your rental expenses. We'll break down what it is, how it works, coverage options, and dive into all the details you need to know.

You can also use our free comparator to compare car insurance quotes from Canada's best providers based on your unique needs.

What is loss of use car insurance?

Loss of use car insurance, also known as temporary vehicle replacement coverage, is an optional add-on to your standard car insurance policy in Canada.

For instance, you get into an accident (covered by collision insurance) and your car needs repairs. Loss of use coverage would help pay for a rental car while yours is in the shop.

Don’t confuse it with liability for damage to non-owned automobiles — both are different types of car insurance coverage that address distinct situations.

Unlike loss of use coverage, liability for damage to non-owned automobiles protects you financially if you damage someone else's car while you're driving it with their permission.

For example, you borrow your friend's car and accidentally back into a parked car. This insurance would cover the repairs for the damaged car.

Understand more about this coverage by comparing different loss of use car insurance plans from various providers. Use our comparator below to compare quotes for free!

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What does loss of use car insurance cover?

Loss of use car insurance typically reimburses you for reasonable expenses to get around while your insured vehicle is unavailable due to repairs or replacement.

Here's what it usually covers:

• Rental car fees: This is the most common expense covered by loss of use insurance. It reimburses you for the cost of renting a car similar to your own (not a luxury vehicle) while yours is getting fixed.
• Taxi fares: If renting a car isn't feasible, loss of use might cover reasonable taxi fares incurred for daily commutes or errands.
• Public transportation passes: Expenses for bus passes, train tickets or other public transportation fares used while your car is unavailable can be covered.

OPCF 20: Loss of use car insurance in Ontario

OPCF 20 is an Ontario Policy Change Form specifically designed for loss of use coverage in your car insurance policy. It's an optional add-on that provides reimbursement for transportation expenses if your car is undergoing repairs or replacement due to insured perils.

In simpler terms, if you have OPCF 20 coverage and your car gets into an accident (covered by collision or comprehensive insurance) or is stolen (covered under specified perils), this endorsement will help pay for alternative transportation like:

• Rental car fees
• Taxi fares
• Public transportation passes

Is loss of use car insurance mandatory in Canada?

No, loss of use coverage is not mandatory for car insurance in Canada.

Car insurance itself is mandatory across all provinces, but the specific types of coverage required can vary slightly. Loss of use falls under optional add-ons that you can choose to include in your policy for additional protection.

To learn more about this insurance and how it works in your province — what it covers, how much it costs and more — use our free comparator.

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How much does loss of use car insurance cost in Canada?

Loss of use car insurance in Canada is generally considered inexpensive, typically costing around $60 to $80 annually.

This is just an estimate and the actual price can vary depending on several factors:

1. Insurance provider: Different insurance companies might have slightly different pricing for loss of use coverage.
2. Driving record and location: Your driving record and location can affect your overall car insurance premium, and loss of use costs might be factored in as well.
3. Car value: The value of your car might influence the cost of loss of use coverage. A more expensive car might translate to slightly higher coverage costs.
4. Policy details: The specific terms of your policy, like daily payout limits or coverage duration, can also affect the price.

What do you need to qualify for loss use coverage?

Qualifying for loss of use coverage in Canada depends on two main factors:

1. Having required physical damage coverage

• In most provinces, loss of use coverage is only available if you already have collision, comprehensive or specified perils coverage on your car insurance policy.
• These coverages pay for repairs or replacement of your vehicle in case of accidents, theft, vandalism or other specified events.

2. Policy wording and endorsements

There are some provincial variations on how loss of use works, such as default coverage vs. endorsements:

• In some provinces like Ontario and Alberta, loss of use coverage for specific situations (theft or not-at-fault collisions) might be included by default in your policy. For broader coverage (any insured peril), you might need to add an endorsement like OPCF 20 (Ontario).
• In other provinces like British Columbia, loss of use typically comes as an optional add-on alongside collision or comprehensive coverage.

Here's how you can find out about your specific situation:

• Review your policy documents: Your existing car insurance policy wording should mention if loss of use coverage is included and under what circumstances.
• Contact your insurance provider: They can clarify your current coverage and explain the options available for adding loss of use coverage if needed.

Does loss of use coverage have any limitations?

Yes, loss of use car insurance in Canada does have some limitations. Here's what you should keep in mind:

Coverage restrictions:

• Not all transportation covered: While it reimburses reasonable costs for getting around, loss of use typically doesn't cover everything. For instance, it likely wouldn't cover ride-sharing services or any luxury car rentals exceeding the class of your own vehicle.
• Limited daily/total payout: There are usually daily limits on how much your insurer will cover for your alternative transportation expenses. Also, there might also be a total cap on coverage for the entire repair or replacement period.

Eligibility limitations:

• Required physical damage coverage: As mentioned earlier, you typically need collision, comprehensive or specified perils coverage on your policy to qualify for loss of use coverage.

Rental car limitations:

• Similar class of vehicle: Loss of use typically reimburses you for renting a car similar to your own (not a luxury upgrade).
• Rental car insurance: The coverage likely wouldn't extend to additional rental car insurance you might choose to purchase at the rental agency.

How long does loss of use coverage last?

The duration of loss of use coverage in Canada typically depends on three factors:

1. Repair completion/replacement: Loss of use coverage will generally last until the repairs on your car are completed or until a total loss settlement is reached (if your car is deemed undrivable).
2. Coverage limits: There's usually a daily maximum payout limit set by your insurance company for your alternative transportation expenses. Once this limit is reached for each day, the coverage stops for that day. There might also be a total cap on the coverage amount for the entire repair/replacement period.
3. Policy wording: Your specific policy wording might specify a maximum timeframe for loss of use coverage, regardless of repair progress or reaching payout limits.

Here's a simple way to think about it: Loss of use coverage stops when whichever of these three conditions is met first:

• Your car is repaired and ready for use again.
• You reach the daily or total payout limit set by your insurer.
• The maximum coverage duration specified in your policy (if applicable) is reached.

How to make a loss of use car insurance claim

The process for making a loss of use car insurance claim in Canada can vary slightly depending on your insurance provider, but here's the general process to go about it:

1. Report the incident: Regardless of whether you plan to file a loss of use claim, the first step is always to report the incident that necessitates repairs or replacement to your insurance company as soon as possible. This could be an accident, theft or vandalism.
2. File a claim for repairs/replacement: You'll need to file a separate claim for repairs or replacement of your vehicle under your collision, comprehensive or specified perils coverage (depending on the cause of damage).
3. Inquire about loss of use coverage: Once you've initiated the claim for repairs or replacement, discuss loss of use coverage with your insurance provider.
   • Confirm if you have the coverage and under what circumstances (default coverage vs needing an endorsement).
   • If you don't currently have it but want to add it, inquire about the process and associated costs.
4. Gather necessary documents: If you have loss of use coverage and plan to claim it, you'll typically need to submit documents like:
   • Proof of alternative transportation expenses (receipts for rentals, taxi fares, public transportation passes).
   • A copy of your car rental agreement (if applicable).
   • Documents related to the repair/replacement claim (accident report, repair estimates, etc.)

For submitting the claim, your insurance company might have an online portal or require you to submit the claim paperwork via mail or email.

Before buying any car insurance policy, be it loss of use or normal coverage, we suggest that you compare multiple plans. It will not only help you get the best coverage but save money, too. Use our comparator and start comparing.

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