Understanding Loss of Use Coverage: What Happens When Your Home Becomes Unlivable?
What if the unthinkable happened to your house and you did not know what to do next?
If you own a house, then you should have reliable homeowners coverage to help protect against everything from theft to fire. Most people assume they will simply file a claim and quickly return the house to normal. But what if the damage goes beyond a few simple repairs and will be completely uninhabitable for the indefinite future?
This is where your loss of use coverage comes into play. Unfortunately, far too many homeowners do not know how home insurance works when it comes to loss of use of the property. Ready to learn more about this important protection and what it can do for you when disaster strikes? Keep reading to discover everything you need to know.
When Disaster Renders Your Home Unlivable
What is loss of use in home insurance? In short, this coverage pays out in the event your house becomes temporarily unlivable. Your policy would normally pay for alternative housing costs, such as moving your family into a hotel or a short-term apartment or rental. Depending on your policy, it may cover other out-of-pocket expenses, such as groceries and meals during this time.
Your individual policy will determine how your carrier defines “unlivable.” For example, most policies will define a house as unlivable when it has suffered a certain amount of structural damage. Your policy may also cover a lack of major utilities, like water, heat, electricity, or plumbing. Finally, the policy may cover other scenarios where the home is not safe to reside in, including gas leaks.
The Essentials of Home Insurance’s Loss of Use Clause
What is loss of use coverage? It sometimes goes by different names: Coverage D home insurance and additional living expenses coverage. This second name better illustrates that the function of this policy is to make sure homeowners do not incur major out-of-pocket expenses when their home becomes completely uninhabitable. Most policies cover the costs of staying at a hotel along with food expenses, pet boarding fees, and public transportation costs.,
Now, while loss of use comes in handy, keep in mind that the exact amount of coverage you have will be determined by what your homeowners insurance covers. The maximum payout is limited to a certain percentage of your dwelling coverage. To make sure you have enough money in the event of an emergency, it is important to set your limits accordingly.
How Do I Determine the Adequate Amount of Loss of Use Coverage Needed?
The standard limit of home insurance loss of use is between 20% and 30% of your dwelling coverage. While this amount is sufficient for most homeowners, you should speak with both your family and your agent to determine whether you need the additional protection of a higher limit, and be on the lookout for signs you need additional home insurance.
What Does Loss of Use Coverage Really Cover?
You now have an answer to “What is loss of use coverage?”, but you may still have questions about which perils are and are not covered. In general, your hotel/motel costs and food expenses are typically covered, as are pet boarding fees and public transportation costs.
Remember to always check the “fine print,” as it determines what you should know about your homeowners insurance. In short, your own policy will describe in detail everything that is and is not covered by your carrier.
Navigating Limitations and Exclusions
What does your Coverage D home insurance not cover, though? The short answer is that it will not cover costs you were paying before disaster struck, including your mortgage, insurance premiums, childcare expenses, and so on.
As noted above, be sure to personally inspect your own policy. That way, you will know about any limitations or exclusions well before you have to file a claim.
Special Considerations for Unique Situations
While there are different types of home insurance out there, loss of use typically works the same when it comes to damage to your own house. However, you may very well have a different situation. For example, maybe it was not your primary residence that was damaged, but a property you rent out to others.
How does your homeowners insurance work when a rental property is damaged? Below, you will find the answers.
Loss of Use in Connection with Rentals and Part-Time Leasing
With rental properties, loss of use coverage typically pays out the money you would be collecting for rent while the home is being repaired. As a landlord, though, you are still responsible for paying the utilities and other maintenance costs associated with the home. Remember, different carriers may cover this scenario in different ways, so you may want to shop around until you find the policy that works best.
Condos and Mobile Homes: Adapting Coverage to Fit
Condos and mobile homes are usually covered by slightly different types of home insurance, but loss of use works the same in that it covers additional living expenses in the event of a catastrophe. In most cases, the primary differences between a house, condo, and mobile home loss of use policies are the limits recommended by your carrier.
Stay Covered When It Matters Most – Explore Home Insurance
What is loss of use in home insurance? Now you know the answer as well as what is and is not typically covered by these policies. But do you know who is ready to offer you the best loss of use coverage?
Here at InsureOne, we are here to protect you and your house from the dangers of tomorrow, all while revolutionizing and personalizing the world of customer service. Once you are ready to give your home maximum protection, come get a quote online. You can also pick up the phone and give us a quick call at 800-836-2240. Finally, feel free to come find an InsureOne office near you.