Disasters cost more than you think.
Luckily, loss of use coverage can help.
You were trying to follow a recipe for homemade French fries when all hell broke loose. The resulting grease fire took out most of your home.
Luckily, you have homeowners insurance to cover the damage. But now there are some additional expenses that you hadn’t even considered—a hotel bill, takeout dinners, laundry service—how are you going to pay for those?
Enter: Loss of use coverage.
What Is Loss of Use Coverage?
There’s a reason loss of use coverage (or Coverage D) is also known as additional living expenses (ALE) insurance.
This form of coverage is designed to cover the additional living expenses that arise when you can no longer inhabit your home due to a covered loss.
For instance, if a tornado levels your home (and you’re also covered against tornado damage), insurance will reimburse you for those extra costs you incur while you’re waiting for your home to be rebuilt.
Being unable to occupy your home comes with a host of other expenses that you may not have considered:
- Temporary residence (such as a hotel, condo, or apartment)
- Moving and/or storage costs
- Food/grocery bills
- Car mileage
- Parking fees and/or public transportation
- Pet boarding (if your temporary residence does not allow pets)
If you are a landlord, you can also get rental reimbursement coverage in the event that you cannot collect rent due to a covered loss.
What Isn’t Covered?
It’s important to note that loss of use coverage only applies if the cause of the loss was covered under your homeowner’s policy.
For example, if you didn’t carry flood insurance, you would not be able to claim any of your additional living expenses if your home was damaged in a flood.
Loss of use would also not cover any costs or bills that you would be paying if the damage had not occurred. For instance, you can’t be reimbursed for things like your mortgage, utilities, and childcare expenses.
So how are things like food bills and car mileage covered? For those expenses that existed before the damage, loss of use coverage would reimburse you for any excess costs you may be responsible for.
For example, if you regularly spend $300 a month on food but now spend $500 eating out (because your hotel room doesn’t have a kitchen), you would be reimbursed $200.
What Does It Cost?
Good news! Loss of use coverage is already included on your standard homeowner’s policy!
The only decision you’ll have to make is choosing your coverage limit.
Your limits are calculated as a percentage of your dwelling coverage limit, typically either 10, 20, or 30%. So if your dwelling coverage limit is $200,000 and your loss of use coverage limit is 20%, you can be reimbursed for up to $40,000 for additional living expenses.
Your independent insurance agent can help you decide which coverage limit is right for you, based on your living situation, risk level, and budget.
Make the Most Of Your Insurance Policy
Loss of use coverage is a standard part of your home insurance policy, but you might not have realized it. In fact, you might be kicking yourself now for not taking advantage of it in the past.
This is why it’s crucial that you fully understand your insurance policy. Knowing what coverages you have (and don’t have) is the first step toward making the most of your insurance. And the best way to become fully informed about your coverage is by talking to an independent insurance agent.
Here at Harry Levine Insurance, we are passionate about building a network of coverage that works for each of our clients’ needs. That’s why we take the time to discuss their goals, lifestyles, and risk tolerance in addition to explaining the types of coverage they are most likely to benefit from.
If you have questions about your existing insurance policies or want to update your policy, give us a call so we can discuss your options.