You don’t want to have to worry about emergency shelter when disaster strikes. Your home insurance policy can pay for accommodation and daily expenses if your home is destroyed.
In addition to covering your home and personal property, a homeowners insurance policy also has loss of use coverage. If your home is badly damaged or you need to temporarily move during repairs, this coverage may be helpful. It is crucial to understand what loss of use coverage means, how it works and how insurance companies can differ. You can protect your family should disaster strike.
What is loss-of-use coverage?
Loss of use coverage, also known as Additional Living expenses, is part of the standard homeowners’ insurance policy. This protection is also listed as Coverage D on your policy.
Loss of Use coverage covers essential expenses while you’re unable to live in your home because of a covered claim. Loss of use coverage covers you so that you don’t have to pay out of pocket for expenses such as extended hotel stays and meals at restaurants.
Your home must be damaged by a covered peril before you lose your use coverage. For example, if your home was severely damaged in a flood, loss of use coverage wouldn’t apply because home insurance doesn’t cover flood damage and flood policies exclude loss of use coverage.
This coverage has certain limits. Your policy may not carry 30% of the dwelling coverage you have, which could mean that your policy can only cover $60,000 for a policy with a $200,000 limit. Talk to your insurance provider to discuss your policy and the coverage that is appropriate for you.
What is the secret to it?
Imagine that a large portion of your home is destroyed by a wildfire. This would render it uninhabitable. Your homeowner’s policy would cover the cost of the rebuild, as well as any personal belongings that perished in the fire. Your loss of use coverage will pay for temporary living expenses such as hotel and Airbnb accommodations, food, parking fees, and other costs.
There are a few options for how your insurance company might handle your loss-of-use payment. Safeco, for example, may offer immediate assistance by way of an advance on your claim settlement. Others may assist you in finding and paying for temporary lodging or rental property.
Keep track of all receipts you receive for normal living expenses while you wait for your final settlement.
What is the loss of use coverage?
The loss of use policy covers you for the cost of most living expenses while you are unable to live at home. These are the basic coverages:
- Apartment, motels, hotel, rental, or other expenses related to residence
- Moving your items from one place to another can be expensive.
- Fuel expenses if extending your work commute
- If you need to park in a temporary place, parking fees may apply
- If you don’t have a washer and dryer, laundry costs may be an expense.
- If you need to board your pet while you wait for repairs, you will be charged pet boarding fees.
- Extraordinary fees for meals (e.g., if you are not able to cook at home and must eat out at restaurants)
Each insurer has different coverages. Check with your provider to find out which items are covered under your loss-of-use policy. Also, you should find out whether there are limitations such as a maximum benefit amount for expenses related to temporary living.
Insurance companies offer loss of use coverage for anywhere from 10% to 30% of the insured value of your home. If your dwelling coverage (or coverage B) is $300,000., your loss of use benefits will be between $30,000 to $90,000. However, a few insurers may have unlimited loss of use coverage limits, so check your policy declarations page.
Loss of use coverage works similarly for condo insurance. Your HO-6 condo policy will provide additional living expenses coverage if your condo is damaged or you need to move. Some insurance companies will combine your dwelling’s worth with your personal property coverages to calculate your loss-of-use coverage limit.
The same coverage applies to renter’s insurance policies in that the loss of use coverage helps you maintain your standard of living while you wait to move back into your rental. Insurance companies calculate your coverage limits based on a percentage of your personal property coverage.
Renters insurance companies might pay you a flat fee in other cases. To find out how your insurance company calculates your benefit amount, it’s a good idea to talk to your provider.
What does the loss of use coverage not include?
Most expenses related to temporary living situations can be covered by insurance companies. But, loss of usage coverage does not cover all expenses. You can’t use loss of coverage unless your house is damaged by a covered peril.
Home insurance doesn’t cover damage from flooding or earthquakes, for example. If your home is severely damaged, then loss of use coverage won’t apply. You can’t use loss of coverage for elective renovations and general maintenance.
Many insurance companies offer a list of exclusions. Make sure to know the exclusions before you file a claim. This will ensure that you don’t spend money on unnecessary expenses only to later find out they won’t pay it.
How do I get reimbursed for living expenses?
There are some things that you can do to speed up the claims process if you need to use your additional living expenses coverage.
- Keep receipts of all necessary expenses.These expenses can include your rent, hotel bill, moving expenses, and receipts for restaurant meals or pet boarding fees. These receipts will be helpful to your property insurance in calculating reimbursement expenses. These receipts can be helpful in expediting the claims process.
- Talk to your insurance company.Ask your insurance company questions about the claims process when you file a claim. Learn how long it takes for a claim to be approved, processed and reimbursed.
- Begin your claim online.Many insurance companies offer online claims submission. It’s fast, easy, and secure.
- Upload documentation.Many companies permit you to upload any supporting documentation such as receipts or pictures.
- Make a list.Make sure to pay attention to all documentation required by your insurance company. Also, make a checklist of each step so you don’t forget anything.
Your claim may be delayed if you miss a step or fail to provide the necessary information.
Questions frequently asked
What is the cost of loss of coverage?
Loss of use coverage is a standard part of most home insurance policies. The cost is already included in your home insurance premium. To lower your rate, you cannot drop loss of usage coverage.
Are homeowners’ insurance policies able to cover loss of use?
Yes. Loss of use coverage is available in most homeowners insurance policies. The exception to the HO-1 form is not included. To be eligible for loss of use coverage, you must have your home damaged by a covered peril. Your loss of use coverage will not be applied if your claim is denied.
Are you required to pay a deductible if your use insurance is cancelled?
A home insurance deductible generally applies when filing a claim, but you do not have a separate deductible for loss of use coverage. Your living expenses will be covered up to the policy limit and approval by your insurer.
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