This post is my third in a series where I address common FAQs about Homeowner’s Insurance. After the many changes insurance companies have implemented to home insurance recently, this leaves many consumers confused and very unsure of what exactly they are covered for. This series is aimed at addressing the important parts of your home insurance policy and what kind of questions you should be asking your agent.
What is Loss of Use Coverage?
Most homeowner’s typically have a good idea of what their homeowner’s policy covers them for. Still, there are many coverages included in most policies that a lot of people don’t know is included in their policy. One of these coverages that typically gets overlooked most often is Loss of Use or often known as “Additional Living Expenses” or “Part D.”
Loss of Use Coverage will pay the necessary increase of living expenses needed to maintain your family’s current standard of living while your house is being repaired or rebuilt. Expenses typically covered include the cost of a hotel room, food bills in excess of normal grocery or restaurant bills, and the cost of moving property into storage.
Typically, a covered loss must occur before any money will be paid for additional living expenses. Homeowner’s should also keep in mind that most policies place a limit or cap on this coverage. A common cap companies place on this coverage is 20% of the limit of insurance carried on the dwelling. More and more companies are starting to include unlimited loss of use for up to a certain time period, typically 12 or 24 months. Check with your agent to find out the exact amount of coverage you have if you were to make a claim.
What about my rental property?
Those who have a rental home or rent a part of their own home to receive additional income should be vigilant to their Part D Coverage. For these instances, the Part D limit will apply to replacing loss rental income while the house is being repaired.
How do I know if I have enough coverage?
Unfortunately it is terribly hard to come up with an exact coverage amount since all of the costs associated with this coverage vary so greatly. It also depends on how much damage is done to the home and how long it will take for it to be fixed. Your agent should be able to find the right coverage to meet your needs and to make sure the loss of use coverage doesn’t run out before you get to go home.
Contact me today for a free evaluation of your current insurance policy and make sure you have the right coverage!