Home is a place where we can go, to take things off our shoulders. It’s also a place where our heart lives. But we can’t disregard the fact that some hazards are also living around us. These hazards are natural disasters and accidents. In some instances, due to these hazards you are forced out of it. Worry no more, because with the help of loss of use coverage. It can help you reimburse with all your expenses.
But what is loss of use coverage? Let’s have a quick overview on loss of use definition. Before we dive deeper into the important things we need to know on loss of use coverage. So, a loss of use definition is actually to reimburse all your expenses. While your property is under construction or temporarily unavailable.
In other words, it’s insurance coverage. Wherein it covers you when an increase in living expenses occurs. But of course, it should be under certain circumstances. Like when your house is temporarily unavailable because of a covered peril. For example, your house experienced a windstorm. The loss of use coverage can be used to pay for your hotel room.
Table of Contents
Will loss of use coverage cover me after a hurricane?
Yes, due to the fact it’s part of a covered peril. Also, if your house was destroyed by a hurricane. The loss of use coverage will automatically cover your additional living expenses. While your house is under reconstruction.
Another example is if your home experienced massive damage. Due to a powerful storm. Moving out of the house is needed while it’s under repair. The loss of use coverage will come to assist you in paying. It’ll assist you by paying for your temporary home. And necessary incremental living expenses are also included here. But, always keep in mind that if you live somewhere else. The costs or bills can add up. For example, your hotel bills and your transportation costs.
So, what you need to do is always secure the receipts. Because you’ll need them soon for the reimbursement process. Also, take note if your home is temporarily unavailable because of flood damages. Loss of use coverage won’t help you. Due to the fact that flood damage is not a part of a home insurance policy.
What is Loss of Use Coverage on a Renters Insurance Policy?
The loss of use coverage on renters insurance is actually a bit bizarre. When you look closely at your renters policy you’ll notice it in an instant. You need to keep in mind that if you lose your apartment. The renters insurance policy will not exactly find you a new one.
A loss of use coverage is also referred to as additional living expense coverage (ALE). This ALE actually covers additional costs if your house or apartment is temporarily unavailable. These additional costs include the hotel room, food and other expenses. Take note that additional living expenses are usually part of a homeowners policy or renters insurance policy.
Let’s have a scenario for a better understanding. After his apartment experienced a fire incident. Ronnie is sitting in his motel room. Thinking how he’s going to pay for his room, meals and other extra expenses. He can’t use his apartment for a while because of the incident.
So, the loss of use coverage on a renters insurance policy can actually help him with his problems. Because this type of coverage is making sure that if Ronnie can’t live in his apartment. The renters policy will pay for all the expenses. Which includes his motel room, meals and other additional expenses.
Always keep in mind that a loss of use coverage only works to a covered loss. This covered loss can be due to break-in or peril that prevents you from using your apartment. So, if you’re forced out of your apartment and it’s not because of a covered loss or peril. Then the loss of use coverage won’t come to help you.
What is Loss of Use in Home Insurance?
The loss of use coverage home insurance actually pays the necessary increase. Specifically in your living expenses. The purpose of this is actually to maintain your family’s standard of living. Which of course, while your house or property is currently under construction due to a covered peril.
You need to take note that there’s a limit on a loss of use. On a dwelling coverage it’s 10% up to 20%. For example, you have $160,000 in your dwelling coverage. The 10% of it means you have a limit of $16,000 on loss of use for an entire year. You can visit “Dwelling Insurance: Important Things You Need” to know more about how this coverage actually works.
You can also check these articles:
- Everything You Need To Know Between Homeowners and Dwelling
- GEICO Home Insurance Review: Things You Need To Know
Here’s another important factor you need to keep in mind. The duration of repairs. For example, your repair lasts for more than 7 weeks. Don’t rent a room that’s expensive, like renting an expensive hotel. Or have a meal at a luxurious restaurant. What you really need to do here is to plan everything properly. By doing this you’re helping yourself not to use out of pocket money.
Does loss of use cover lost rental income?
Loss of use coverage Rental property actually works like this. If you’re renting your property to a tenant. You can lose your rental income if the rental property is temporarily unavailable. But luckily, with the help of loss of use coverage. It can help you replace the lost rental income. In some policies when things went south. They will reimburse you for the lost rental income with the help of ALE coverage.
So, in other words the rental income coverage is a part of loss of use coverage. It’ll actually reimburse the lost rental income when your rental property is under construction. You can check your policy or call your agent to understand it well.
The overall point here is if your home experienced a covered peril. Wherein it results in becoming inhabitable. Loss of use coverage can guarantee you that they’ll help you stand again. Lastly, they will help you when you need them the most.