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Loss of use insurance

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Loss of use

Loss of use insurance is a policy designed to protect the insured from financial losses that might arise if their vehicle is damaged and cannot be used. Specifically, it includes the costs of renting or hiring a replacement vehicle, or financial reimbursement if no replacement is available

Why is loss of use car insurance important?

Imagine you rely on your vehicle for your daily business operations. If it gets damaged, you could potentially lose income while waiting for repairs. Loss of use insurance covers these interim expenses, helping you to continue your business without interruption or financial strain. It ensures that life carries on as normally as possible even when unexpected damage to your vehicle occurs.

It’s crucial to have loss of use cover if your business:

  • Depends on vehicles
  • Faces tight deadlines
  • Operates in multiple locations
  • Requires uninterrupted services

What does loss of use cover?

Rental costs

If your vehicle is damaged and unusable, this policy covers the actual cost of renting or hiring a replacement vehicle, typically this is up to $100 per day for 30 days. The amounts and duration can be increased if needed. This allows businesses to maintain their operations seamlessly.

Financial reimbursement

In the event that no replacement vehicle is available for rent or hire, the policy provides financial reimbursement. This offers flexibility and helps cover other potential transportation costs or makes up for lost income whilst the vehicle is out of action.

Losses exceeding a specified number of days

The excess under this extension ranges between 5 days and 7 days from the date of loss. This means that if your loss of use extends beyond this period, the insurance will then kick in, covering the expenses from that day onwards.

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

Loss of use premiums are calculated on several different factors including:

  • Type of vehicle
  • Location 
  • Industry operating in
  • Claims history

Loss of use insurance in NZ typically costs between $20 to $30 per month.

Who needs loss of use insurance?

Any business or individual heavily relying on vehicles for daily operations, service delivery, or commuting should consider this insurance. It’s particularly important for logistics companies, delivery services, taxi and ride-share drivers, and businesses with mobile services.

No, it’s not mandatory but highly recommended for businesses or individuals relying on vehicles for income or essential services.

 The speed of receiving a replacement vehicle will vary depending on availability. The policy does cover reimbursement if no replacement vehicle is available, ensuring you have financial support.

What does loss of use vehicle insurance not cover?

Damage to Windscreen or Window Glass

The policy doesn’t cover loss of use if the damage is limited to windscreen or window glass or sunroof. This is usually considered minor damage that doesn’t prevent the vehicle’s use.

Losses within the excess period

The policy doesn’t cover the first 5 to 7 days of incurred losses, meaning the benefits kick in from when this period ends. Some policies waive this period if you are not at fault. 

Amounts Over the Daily Limit

The policy has a daily limit, often $100 Excluding GST, so any amount over this is not covered.

Duration Beyond 30 Days

The coverage is often capped at 30 days (some policies allow this to be extended,) and expenses incurred beyond this period are not included.

Other common questions about loss of use insurance NZ

You may have options, but it typically depends on availability and the terms of your policy. Consult with your broker for specifics.

This may vary by policy and provider, so it’s essential to discuss your specific usage with your broker to ensure proper coverage.

 You’ll generally need to report the incident to your insurance provider, fill out the required forms, and provide any necessary documentation such as repair quotes or rental agreements.

Some policies might have restrictions or preferred providers. It’s always best to consult with your broker for detailed information.

In many cases, yes. Speak to your broker, like Gerrards, to customize your current policy with loss of use coverage.

View more frequently asked loss of use insurance questions here.

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