How can someone claim loss-of-use or rental car expenses after an accident when the at-fault driver’s policy limits are exhausted?

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Claiming Loss-of-Use and Rental Car Expenses After Liability Limits Are Exhausted in North Carolina

Detailed Answer

North Carolina law lets you recover the reasonable cost of renting a substitute vehicle (or the value of using your own second vehicle) while your damaged car is being repaired or replaced. This category of damages is called “loss-of-use.” You usually collect it from the at-fault driver’s property-damage liability insurance, which must provide at least $25,000 in coverage. N.C.G.S. § 20-279.21.

When that coverage is fully paid out—often because repair costs, diminished value, or multiple claimants have exhausted the limits—you still have several routes to payment:

1. Check Your Own Policy for Rental Reimbursement Coverage

Many North Carolinians buy an optional “Transportation Expense” or “Rental Reimbursement” endorsement. If you have it, your insurer pays for a rental car (usually up to a daily and total cap) regardless of who caused the accident. You file the claim directly with your company and provide the exhaustion letter from the at-fault carrier.

2. Use Collision Coverage and Let Your Insurer Subrogate

Your collision coverage can pay the vehicle repair bill as well as related loss-of-use costs specified in the policy. After paying you, your insurer may pursue reimbursement (subrogation) from the at-fault driver, sparing you collection headaches.

3. Tap Underinsured Motorist Property Damage (UIMPD) Coverage

If your property-damage limits exceed the at-fault driver’s limits, you may have UIMPD. This optional coverage fills the gap once the liability limits are exhausted. The statute governing UIM coverage is also found in § 20-279.21. Your insurer will require proof that the at-fault limits are paid out in full before it issues payment.

4. Sue the At-Fault Driver Personally

Liability insurance caps do not cap the driver’s actual responsibility. You may file a civil action in District Court (or Small Claims if the amount is ≤ $10,000) for unreimbursed loss-of-use. You have three years from the accident to sue. N.C.G.S. § 1-52(16). Before spending time and money on litigation, evaluate whether the defendant has assets or wages you can realistically collect.

5. Claim “Actual Use Value” When No Rental Is Obtained

Even if you decide not to rent a substitute car, North Carolina allows you to recover the reasonable value of being without your vehicle—typically measured by prevailing rental rates for a similar car. Keep evidence such as repair timelines, market rental quotes, and mileage records to prove the value.

Documenting and Filing Your Claim

  1. Request a written “exhaustion letter” from the liability insurer confirming its policy is paid to limits.
  2. Notify your own insurer in writing of any potential first-party claim (rental reimbursement, collision, or UIMPD).
  3. Gather proof of loss-of-use: rental contracts, credit-card receipts, mileage logs, mechanic repair orders showing downtime, and sworn affidavits if needed.
  4. Submit a demand package to the appropriate insurer, citing statutes and policy sections. Ask for payment within 30 days.
  5. Calendar the three-year statute of limitations so you can file suit if negotiations fail.

Helpful Hints

  • Pull your declarations page early so you know what first-party coverages you actually purchased.
  • Rental caps vary—common limits are $30–$50 per day and $900–$1,500 total. Choose a vehicle within the cap to avoid out-of-pocket costs.
  • If your vehicle is a total loss, loss-of-use stops when the insurer offers a fair actual-cash-value settlement, not when you buy a new car.
  • A second family car can reduce rental needs, but you may still claim “actual use value” if the replacement vehicle is inferior (e.g., company truck vs. personal SUV).
  • Keep communication polite but in writing; it creates a clear record that helps if litigation becomes necessary.

Still Have Questions? We Can Help.

Loss-of-use disputes pivot on precise insurance language and strict evidence rules. Our North Carolina attorneys handle these claims every day and know how to unlock every available coverage dollar. If an exhausted policy or reluctant adjuster is blocking your rental reimbursement, call us now at 919-313-2737 for a free, no-pressure consultation.

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