Dec 19, 2023
Why coverage for transportation replacement is crucial for Ontario drivers
If you own a car, you know that it is vital to have an active policy before you hit the road. But what about additional protection like loss of use car insurance?
Accidents are unfortunate, and so are delays in vehicle repairs or claim settlements after the fact. You can’t afford to be without your vehicle for a short time. Loss of use coverage is specifically crafted to provide a transportation solution during this uncertain period.
This article will clarify what this coverage entails, helping you make an informed choice on whether it's a valuable addition to your Ontario auto insurance (you read that right – it’s surprisingly not mandatory!).
What's on this page:
What does loss of use mean in insurance?What does loss of use cover?
OPCF 20 explained
Is loss of use mandatory for insurance?
How much does OPCF 20 cost?
How to qualify for loss of use coverage
How long does loss of use coverage last?
Limitations of loss of use coverage
OPCF 20 Loss of use coverage FAQs
What does loss of use mean in insurance?
Loss of use coverage, or temporary vehicle replacement, is an optional add-on to your auto insurance policy. This policy endorsement is handy when your vehicle requires replacement or repair due to damage.
According to FSCO’s definition, loss of use coverage is described as providing a "substitute vehicle or reimbursement for your transportation expenses while your own vehicle is undergoing repairs or replacement due to damage caused by a covered peril."
If your vehicle is damaged, the loss of use policy covers your transportation costs while you wait (up to your policy limits). You can rent a car, take public transit, or call a cab or Uber.
In Canada, depending on your location, there are three common types of loss of use forms:
- OPCF 20 for drivers in Ontario.
- QEF 20 for drivers in Quebec.
- SEF 20 for drivers in Alberta and Atlantic Canada.
What does loss of use cover?
Have you ever been in a situation where your car was severely damaged in an accident and required extensive repairs or even a complete replacement? If yes, you might have wondered whether your policy includes coverage for a rental car during the waiting period. The key factor determining this is whether you have a loss of use coverage.
Here is an example of when OPCF 20, coverage for transportation replacement, could support you:
- Report the accident: You report the car incident to your insurance company after the accident. They confirm that the damage is substantial and that you are not at fault for the accident.
- Assessment and repairs: Your insurer approves the needed repairs after the adjuster assesses the damage. The repair shop estimates three weeks for completion.
- Rental vehicle: Loss of use coverage in your policy means your insurer will pay for a rental car during repairs. They'll give you info on approved rental agencies, daily coverage limit, and deductibles.
- Rent a replacement vehicle: You visit a rental car agency and select a similar vehicle. You sign a rental agreement and pay any necessary deposit. You inform the agency that your insurance will cover the rental (if it's an option).
- Reimbursement: It's important to keep all rental documents, such as receipts and agreements, for reimbursement purposes. After your car is repaired, submit rental receipts to your insurer for reimbursement. If your policy covers it, you'll be reimbursed for the entire rental cost.
Loss of use coverage paid for a rental car while your car was being repaired, so you didn't have to arrange or pay for it yourself.
OPCF 20 explained
You get into a collision. Suppose your car needs repairs. It will be in the shop for about 1-2 weeks after the accident. However, you still have to go to work, run errands, and drop your kids off at school. You need a car to get around.
If you have OPCF 20 insurance coverage, you will be covered for the cost of a rental vehicle, while you wait for your car to be fixed.
However, if you do not have loss of use coverage, you will need to pay for transportation costs out of your pocket while your vehicle is undergoing repairs. The cost of a rental car, public transportation, taxis, and Uber can add up.
Is loss of use coverage mandatory for insurance?
Insurance for vehicles in Ontario is mandatory and includes coverages like third-party liability, and SABS. However, loss of use coverage is an optional add-on that you can choose to include in your policy, but it is not a requirement by law.
How much does OPCF 20 cost?
Loss of use coverage is priced at approximately $60 to $80 annually, although this figure can fluctuate based on various factors, such as bundling home and auto and available insurance discounts.
Factors that impact cost for loss of use coverage
- Your driving record and experience.
- Use of vehicle, such as for commercial driving, and how many kilometres you drive annually.
- Year, make and model of your vehicle.
- The location where you live and commute.
For the most precise estimate tailored to your individual circumstances, it's recommended to consult with your ThinkInsure broker. They can provide you with an accurate cost assessment that aligns with your specific needs.
How to qualify for loss of use coverage
Loss of use coverage is an additional feature that becomes applicable when you have one or more of the following types of insurance:
- Specified perils covers losses arising from specific risks like theft, fire, earthquakes, explosions, and weather.
- Collision coverage can help you with added protection from costs related to an accident with another vehicle or object.
- Comprehensive coverage addresses losses not caused by collisions, including those under specified perils, falling objects, and vandalism.
- All perils coverage combines collision and comprehensive plans so you'll have protection against the majority of risks.
You don't need all of the types above to be eligible for a loss of use policy. But, your coverage types limit your loss of use claim. For instance, with only collision coverage, you can't claim a rental car if your car is stolen - that's covered under comprehensive, specified perils, or all perils coverage.
Ready to add loss of use to your policy?
Speak with our brokers to ensure you're getting the lowest rate and best coverage for loss of use insurance.
How long does loss of use coverage last?
Typically, your provider will discontinue loss of use coverage after the occurrence of one of three events:
- When your damaged vehicle has been fully repaired.
- When you've received a settlement for a total loss.
- When you've reached your coverage limit.
The specific coverage limit varies based on your policy, and each insurer may offer different limits according to your agreement. For instance, your plan might include a maximum of $500 in coverage.
To understand how loss of use coverage applies to your situation, it's advisable to review your policy documents or have a discussion with your insurance broker.
Limitations of loss of use coverage
Loss of use coverage comes with certain limitations that are important to understand. Here is a general look at limitations:
- Your replacement vehicle must be of a similar size to your damaged one, which means you can't rent a sports car if your own vehicle is a minivan.
- Under 21? Most rental companies won't serve you. Loss of use coverage can pay for cab fares or public transit.
- Plans usually don't cover fuel or additional rental car insurance. You may still face additional expenses while using a temporary vehicle.
OPCF 20 Loss of use coverage FAQs
If you have additional coverage options, such as comprehensive insurance, you should have loss of use coverage included in your policy. Always check with your insurer to be sure.
Loss of use coverage is an add-on for your policy. If you want to protect yourself from any transportation costs associated with an accident, you can add it to your policy.
Your insurance policy may cover the cost of a rental car if your vehicle is damaged. However, if a rental car is not an option, your insurer may reimburse you for the reasonable cost of taxis or public transportation. This coverage differs from the "damage to non-owned vehicles" coverage, which does not cover rental cars.
Adding loss of use to your policy can help you if you need a vehicle replacement
Loss of use coverage is a valuable addition to your auto insurance that can provide significant benefits. Despite the added cost, convenience, cost savings, and peace of mind make it worth it when your vehicle is out of commission.
If you need help deciding whether to include it in your policy, discussing your specific needs and circumstances with your broker is the best place to start.
