Coverage D: Loss of Use in Home Insurance
Coverage D in your home insurance policy covers loss of use for your primary home. When an unexpected tragedy strikes and leaves your home uninhabitable, your loss of use coverage steps in to cover extra expenses that come from needing to live somewhere else for a while.
What’s Covered by Loss of Use?
Additional Living Expense: If a disaster forces you from your home, then you’ll have extra expenses while your house undergoes repairs. A few examples of what qualifies for reimbursement under Coverage D:
- The cost of temporarily living in a hotel, apartment, or rental home that is comparable in size/value to your current home. Coverage only applies while your house is uninhabitable or while you search for a new home.
- If you usually pay $150/week for groceries, but your grocery bill suddenly increases to $200 while living in your temporary home, you can expect to recover the extra $50.
- If your dog or cat has to chill at a pet hotel while you wait for your home repairs, you can submit receipts for reimbursement under Coverage D.
- Renting furniture to use while you live in your temporary home should be covered.
- Moving to your temporary home or storing belongings in a storage facility during repairs fall under Coverage D: Loss of Use.
- If your temporary home is further away from work, forcing you to spend more on fuel while traveling, then you document the difference and submit receipts to your insurance company.
Fair Rental Value
If you rent out a room in your home, then the income you lose from that rent should be covered, minus expenses.
Example: Your rental home tenant paid you $500 a month in rent, but $100 went to utilities, then you would receive $400 per month until the house was habitable.
Make sure you have the correct home insurance policy type if you are renting your home to others.
If a governing body prevents you from returning to your home after a disaster due to nearby damage to homes, your insurance may not cover this temporary leave of absence as it is a precaution and mandated by the government.
Keep track of your receipts for all your expenses. The more detailed information you can provide, the easier it will be to file your claim.
What Are My Coverage Limits?
Know how much your loss of use policy covers so that you can budget accordingly. Typically, Coverage D is 10 - 30 percent of your home’s value. If your declarations page says you carry $200,000 in Coverage A for your home, then you can expect Coverage D to be between $20,000 and $60,000.
Are There Any Exceptions to a Loss of Use Policy?
The primary condition to tap loss of use coverage is that your house must be made uninhabitable by a covered peril.
Coverage can be a problem for homeowners with a named peril insurance policy or if the HO3 policy excludes the cause of damage. Typical exclusions are mold, earthquakes, floods.
Loss of use coverage only remains active during the time to repair or replace a damaged home. If it takes two months to fix your home, but you decide to wait two more weeks before moving in, then you wouldn’t be reimbursed for the additional two weeks. Home insurance companies can put a specific time limit on the loss of use, usually 12 months.
You must find a comparable residence to live in while you wait for your home repairs. If you usually pay $2,000/month for your mortgage, then you cannot rent a home that costs $3,000/month with double the square footage.
The loss of use coverage does NOT cover your mortgage. This policy aims to cover additional expenses, and your mortgage would be an expected expense.
Understand Your Homeowners Policy
It’s important to remember that each policy is different. It’s best to look over your policy and talk to your insurance agent to understand the specific Coverage D in your plan.
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