What is loss of use in home insurance?

Loss of use is a type of home insurance coverage designed to reimburse you for any additional living expenses that come up when you’re in the process of rebuilding or repairing your home. If it’s a rental home, you may even be reimbursed for rental income lost. Most of which would have to come from the result of an uninhabitable home.

Let’s say for example you spend $1,000 per month on groceries regularly. Due to eating out on a regular basis you end up spending $1,200 to eat vs the original $1,000. The policy should cover you for the difference, the $200 extra you’re spending. 

Common examples of expenses that may be covered are as follows;

• Hotel and rental home charges
• Food & utilities
• Extra millage

Loss of use from property damage

How long will your home be unlivable? Depending on the amount of time required to rebuild or repair your home your options may vary. The agents at Eugene C Yates Insurance Agency are always available to answer your questions regarding home insurance. Please feel free to give us a call if you need a new home insurance policy 916 313 6100.

What does loss of use home insurance coverage protect?

What’s great about loss of use coverage is, it can cover you in three different ways. It can cover hotel stays, basic living expense increases and it can also replace rental income. 

Additional living expenses

Being forced from your home can be hard as it is and it can even be difficult to find a place to stay at times. This is where loss of use coverage can help. If your home is being rebuilt and you need to stay at a hotel, loss of use coverage can cover you in situations like these. Additional expenses that are the result of eating out more frequent can be off set with loss of use coverage as well.

A lot of policies come with pretty strict limits, so if you were planning on going to Mortons every night and living at the Ritz you might want to rethink those plans. The coverage is designed to cover a substantial amount of the additional expenses but there are limits. 

There’s also a good chance the insurance company puts a dollar limit in place so you’re covered for only the necessities. If you have additional questions regarding home insurance of loss of use coverage please feel free to contact one of our wonderful agents. They always love helping people get better home insurance! 916 313 6100

Some of the more common expenses the insurance company may cover are as follows;

• Hotel expenses
• Paying rent for a temporary apartment
• Additional fuel or mileage expenses
• Additional food expenses
• Renting a car
• Public transportation
• Clothing expenses
• Storage unit bills
• Parking costs
• Boarding your pet

Loss of use; Fair rental value

If you own rental property and the home is completely destroyed and needs to be rebuilt, there’s a good chance loss of use coverage will reimburse you for missing rental income which the property is being rebuilt. The cause of the destruction would have to come covered peril to be covered, so please read your policy closely to see what covered perils you are covered for.

Sometimes this coverage can cover the rental income for up to 12 months depending on the circumstances. 

Loss of use; Prohibited use

This part of the policy will cover both your additional living expenses and the fair rental value. For a certain number of days if local authority prevents your tenants or yourself from accessing the home. 

This works extremely well if you live in an area where natural disasters are common. For example lets say your area is devastated by extreme flooding making it impossible to get to your home or live in it. If this is the case, loss of use coverage may cover whatever loss of rental income suffered. 

How much loss of use coverage do I need?

The loss of use coverage limit is usually around 20 to 30 % of the homes insured value. So if your home is insured for $500,000 your additional living expenses coverage will roughly be anywhere from $100,000 to $150,000. If you exceed your loss of use coverage limit and you still have additional living expenses, there’s a good chance you will have to pay for the difference. 

If you have additional questions regarding home insurance or would just like to speak to someone about getting a better insurance policy, give us a call. We would love to hear from you! 916 313 6100