By Jarrod Heil
What Is Loss of Use Coverage and What Does It Do?
What would you do if an unexpected disaster struck today? Do you know what steps you’d take if your home became uninhabitable and you had to find a temporary place to live?
Most people never expect to be hit by a disaster, but it happens every day across the country. Many people have no idea what to do if they’re thrust into that kind of situation. Would you be prepared?
Luckily, your homeowners or renters insurance policy with Universal can help make your recovery from disaster a little easier on you — and a lot easier on your bank account — with loss of use coverage.
What Is Loss of Use Coverage?
It’s Coverage D within your homeowners insurance policy that reimburses you for basic living expenses if a covered peril — such as burst water pipes, hurricane damage or a house fire — damages or destroys your home, causing it to become uninhabitable.
Loss of use coverage can be a tremendous help that eases the stress of a natural disaster. The purpose of this coverage is to protect you and your finances so that you can maintain your standard of living without going into debt.
If you own a home, you’ll still have to pay your monthly mortgage payment, so we don’t want you to have to pay double the amount each month for a place to live when your home is uninhabitable.
Additional living expenses and fair rental value apply to homeowners and renters alike. They are two categories for reimbursement under loss of use coverage, and they can help reimburse you for the following expenses:
- • Hotel or rental home that’s an equivalent size as the one you were forced to leave.
- • Food at the grocery store or restaurants, as well as any food that perished during the disaster.
- • Gas due to your commutes and errands being a longer distance than usual.
- • Parking and transportation fees that you wouldn’t have encountered had you been in your home.
- • Pet boarding due to a hotel or home not accepting them or someone having to care for them.
- • Moving costs and temporary storage fees to protect your personal belongings while your home is being repaired or rebuilt.
How Much Is Reimbursed with Loss of Use Coverage?
Loss of use coverage reimbursement is unique to every person, family and their situation. The amount of coverage may be different for homeowners and renters, as each total coverage amount is derived from a separate portion of their policy.
Homeowners Loss of Use Coverage
Homeowners can figure out the maximum amount they can be reimbursed by using the total dwelling portion of their policy. Depending on the state you live in and the type of policy you have, your loss of use coverage may be up to 20% of your dwelling coverage.
If you have $200,000 worth of dwelling coverage, your loss of use coverage would max out at $40,000 ($200,000 x 0.20 = $40,000). Therefore, if your total expenses reached $40,000, you may be reimbursed completely. However, if they exceeded that number, you’d be responsible for paying any amount that goes over your maximum.
Renters Loss of Use Coverage
Since renters do not own the property they are living in and do not have dwelling protection for that property, renters insurance offers a separate coverage, rightfully called “Loss of Use Coverage,” which can be adjusted to suit your needs.
It’s always a good idea to contact your Universal agent to find out if loss of use coverage applies to your unique situation before filing a claim.