If a disaster such as a hurricane, tornado, or fire strikes your home, you may find it temporarily uninhabitable, or even destroyed. Imagine if you have to live someplace else while your home is being repaired—how will you pay for the extra living expenses? Many homeowners insurance policies contain coverage to help you pay for those additional expenses. It’s called “Loss of Use,” “Part D,” or “Additional Living Expenses” coverage. Not all policies include it, but many do.
Here are the three types of coverage that make up Loss of Use:
Additional living expense—reasonable expenses you incur to maintain your family’s standard of living if you must live elsewhere while your home is being repaired. These expenses include things like rent or hotel bills, restaurant or grocery bills above and beyond what you’d normally spend, laundry bills, parking fees, or the cost of storing your belongings while your home is being repaired.
Fair rental value—if you own a tenant-occupied home or rental property and the covered loss makes the rental premises uninhabitable, the insurer will cover the lost rental income. Expenses which will not continue, such as what a tenant pays for utilities, will be subtracted from that reimbursement.
Prohibited use—if you must stay elsewhere when a civil authority, such as a government agency or the state police, prohibits you from accessing your home in a damaged neighborhood, even if your own home is unharmed.
Things to remember:
- Loss of Use is only payable if the damage was caused by an insured peril. This does NOT include flood, which is normally excluded on a standard homeowners insurance policy. Federal flood also insurance excludes additional living expense coverage, but some private flood markets are starting to provide some Loss of Use coverage in their policies.
- Most policies cap the amount of Loss of Use coverage, often at a percentage of the limit of insurance carried on the dwelling.
- No deductible applies to Loss of Use coverage.
- Loss of Use extends beyond the policy term limits if the covered loss occurs before the policy’s expiration date.
Loss of Use can be an important coverage to have if you’re ever faced with a serious homeowners claim. Since coverage terms vary, you may want to discuss with your L & M Insurance Group agent whether or not your homeowners insurance coverage is appropriate for your situation. Please call us at 813-672-4100, or contact us if you have any questions.