A claims department has recently turned down a claim for rental reimbursement on an uninsured motorist claim on a personal auto policy (although they did pay the wrecker bill). I contend that the uninsured motorists coverage should pay rental reimbursement also, but the company claims this is not included in the coverage. I believe that UM coverage was introduced to give the insured an option to pick up uninsured motorists liability—rental reimbursement is certainly an out-of-pocket expense. Are we correct?
Tennessee Subscriber
You are correct that uninsured motorists coverage was introduced to allow the insured to recover for loss sustained as a result of an accident caused by an uninsured motorist. Initially the coverage addressed compensatory damages that the insured would be legally entitled to recover because of bodily injury. In many states recovery is still limited to damages because of bodily injury.
When the uninsured motorists coverage endorsement was changed, where applicable, to include compensatory damages the insured would be legally entitled to recover because of property damage caused by an accident, “property damage” was defined in the endorsement (PP 04 52) as “injury to or destruction of your covered auto.” Unfortunately for your insured, loss of use is not included in the definition, and therefore rental reimbursement is not covered by the endorsement.
The insurer paid the wrecker bill because the policy states the insured must take reasonable steps to protect the auto from further loss. The company will pay reasonable expenses incurred to do this.
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