Loss of Use Law and Legal Definition

Loss of use refers to an element of compensation damanded by a plaintiff as part of their damages stated in a lawsuit. Loss of use may refer to the inability to use an automobile, living quarters, business facility or equipment due to damage caused by the negligence or other wrongdoing of another. In the case of a vehicle damges in a collision, loss of use would be the amount claimed for the rental value of another automobile. The period of loss must be "reasonable," meaning the damages will be limited to a period in which a person would normally and promptly proceed to have the vehicle repaired.

When actual financial loss in procuring a substitute isn't present, the issue of recovery for loss of use is decided on a case-by-case basis. In some courts, where a vehicle or other personal property has been used in business, loss of use damages has been allowed without a showing that a substitute has been rented. Such cases have found that while pecuniary loss in the form of rental payments for a substitute item is not incurred, the plaintiff may suffer substantial personal inconvenience due to the lack of the item.

The following is an example of a state statute governing rental companies' recovery for loss of use of a rental car:

"Damages for loss of use of a rental vehicle shall be calculated based on a good faith estimate of the number of hours of labor needed to repair or replace the parts of the vehicle that are damaged, limited to a maximum of 30 days, calculated under the following schedule, utilizing the daily rental rate on the rental agreement, not including any additional charges:

(a) one day loss of use will be calculated for every four hours of labor time from the repair estimate;

(b) two days for weekends shall be added for every five repair days;

(c) three days for administration shall be added to account for time needed to:

  1. obtain an estimate; and
  2. transport the vehicle to and from the repair facility.

(2) In the event of a total loss of the vehicle, damages for loss of use may not exceed 30 days."