Loss of Use Coverage D: What is covered?
Loss of Use Coverage (Coverage D) is a part of your homeowners’ insurance policy that covers added living expenditures that may occur when your home is temporarily uninhabitable.
Imagine the following:
Your home is being repaired or rebuilt because of a heavy thunderstorm or an emergency like a fire.
Of course, this is a scenario no one of us would like to encounter, but accidents and unfortunate events sometimes take place, and we cannot stop them.
What we can do, though, is protect ourselves by planning ahead.
If you have a home insurance policy, it will cover the costs you need to repair your home. But it is uninhabitable for a certain period. So, where to stay? Can your budget account for the temporary accommodation, food, and transportation?
If you have loss of use coverage included in your homeowners insurance policy, it will reimburse all of these additional living expenses.
For more information about coverage options, how to compare homeowners insurance companies you should trust, and any additional questions you may have, stick around for this three-minute read – we’ll cover it all!
What Does Loss of Use Coverage Mean?
Loss of use coverage (also known as ‘Coverage D,” “loss of use insurance,” and “living expenses coverage”) is part of your homeowners insurance policy that covers additional living expenses that may arise in the event that your home is temporarily uninhabitable.
However, bear in mind that the reason why your house is unsuitable for living during that period has to be due to a covered peril in your renters or homeowners insurance.
A “peril” is anything that could cause damage to your home. The most common risks or perils included in insurance policies are fire, wind, snow, hail, lightning, vandalism, and theft, though this is negotiable, depending on the type of insurance that you select.
Similarly, condo insurance loss of use coverage would be useful if you have to move out of your condo unit, and renters insurance covers loss of use if you are a renter.
Another term that should be mentioned here is Fair Rental Value that some companies may provide. Namely, a Fair Rental Value coverage kicks in case that you rent an insured place to a tenant. While the house is uninhabitable, you will be able to claim Fair Rental Value coverage for rental income you will be missing during the period.
Insurance Geek can help you protect yourself against all risks by discussing your policy options with you and directly with your insurance provider.
Depending on the duration you will have to wait for your home to be rebuilt or repaired, you could face many unprecedented costs, and the total sum could drive up really high.
That’s why you ought to make sure that your use coverage limit is high enough to cover expenses and help you maintain your standard of living. You can contact a Geek Insurance representative if you need any assistance with determining the coverage limit.
With the help of your agent and insurance company, you’ll determine the amount of your loss of use coverage. It is usually 30% of your dwelling coverage limit.
Our carriers allow you to specify your normal living expenses per month by completing their worksheet, which is then used to establish the baseline of your loss of use coverage and process a claim.
A pro tip: To prove that the data is truthful, insurance companies will ask you to provide a copy of the receipts, so always keep them.
Which Living Expenses Are Covered By Loss of Use Insurance?
Before we continue, let’s go over the most frequent expenses loss of use coverage would compensate for if you had to leave your place.
Temporary Housing is the most frequent claim under the use coverage loss insurance. No matter whether your temporary residence of choice is a hotel, an apartment, or a motel, your loss of use coverage will reimburse for the stay.
The cost of moving also applies here. You may need to reimburse storage costs for your household items or need transportation if you bring them along, in which case you can claim transportation and parking fees.
Also, any excessive bills due to a covered loss can be covered by your policy (laundry, grocery and restaurant bills, utilities, additional car mileage, pet boarding, etc.). To put one of these in context – if you have to stay in an apartment, it’s more likely that you will have to dine out more frequently than you would usually. Your policy will cover the difference in the expenses.
What Else Does Your Home Insurance Cover?
Besides loss of use coverage, your renters or homeowners insurance policy usually has the following types of coverages:
- Dwelling coverage (Coverage A). In insurance terms, dwelling coverage refers to the actual residing property and the physical structure of your home. This is also the largest portion of your insurance and pays for the rebuild and repair expenses for your home.
- Separate structures (Coverage B). All the structures that are physically detached from your home, such as a shed, garage, fence, etc., are covered by Coverage B.
- Personal property coverage (Coverage C). Your personal belongings that get damaged as a result of a covered risk are insured by this type of coverage.
- Personal liability (Coverage E). These claims include legal fees if you have injured someone or caused damage to them. For example, you can use it to cover defense in court.
- Medical payments (Coverage F). Your home or renters insurance can also cover the cost of medical bills in the event that an individual is injured on your insured property.
Water Damage is not Standard Coverage – Read This
Flood insurance is not a part of your standard home or renters insurance policy. However, your insurance company may offer you to add an endorsement that will protect you from damage caused by water.
Thus, Nationwide and Safeco can cover damage resulting from leaking plumbing and sewer and drainage backups.
Get a Quote Today
Now that you learned the crucial information about home insurance policies and loss of use coverage, the only question left is:
In the sea of homeowners insurance companies, which one offers the best conditions?
At Insurance Geek, we’ve come with a simple and efficient way of solving this issue for you. We can generate accurate real-time quotes for your homeowners policy available in all states.
What we ask you to do is tell us some basic information about you – such as your ZIP code and address.
The whole process will take around 2 minutes, and you’ll get up-to-date quotes from our carriers.
You don’t have to worry about us spamming you with junk mail. You only have to tell us your data once, and that’s it. It’s your decision whether you want to purchase homeowners or renters insurance and from which insurance company.
Safeco and Nationwide currently provide the best money-to-value ratio for homeowners policies.
Then, one of our agents – better known as Insurance Geeks – will assist you in the assessment and conditions of your home insurance, including Coverage D.
Also, you can save up a lot of cash if you bundle your policies! Therefore, in case you have a vehicle you want to insure or add-on policies that you want to include to your standard homeowners policy, notify us about that, and we’ll come up with a tailored plan for you.
Loss of Use Insurance: FAQ
Q: What does loss of use protection include?
A: Loss of use coverage includes all of the additional living expenses that may arise as a result of a covered peril (aka risk factor) causing damage to your home. Some examples are moving costs, rental value coverage, food expenses, transportation fees, etc. If you want to determine whether it is appropriate to file a loss of use claim, ask yourself: Did this expense occur as a result of damage from a covered loss? Would you not encounter it otherwise? Is it happening while your house is repaired or rebuilt? If the answers are “yes,” the loss of use coverage is the solution indeed.
Q: How is loss of use insurance calculated?
A: Typically, loss of usage coverage is calculated in relation to your dwelling coverage limit, and it is about 20-30% of it. To put it in practice: if your dwelling coverage limit is $300,000, the amount of your loss of use coverage will be up to $90,000.
Q: What is loss of use coverage auto insurance?
A: While the home loss of use coverage pays for expenses that occur as a result of damage caused to your house, your loss of use coverage auto insurance pays for the cost that accumulates while you cannot use your vehicle covered by loss of use auto insurance. Your insurer pays the rental value for a rented car you used while yours was being repaired. Keep in mind that you have to use claims for a car similar to yours, or there’s a risk that your claim will not be accepted.
When your house becomes uninhabitable, you require temporary residence and storage for all of your personal property, and unexpected food costs keep adding up, the solution is loss of use coverage (Coverage D).
Not only will it make the whole situation less stressful, but when you file a loss of use claim, your additional living expenses will be reimbursed.
Ultimately, you’ll be able to maintain your standard of living even though you are temporarily unable to live in your home – and you won’t even feel the pressure on your budget.
The city is going to replace water/sewer lines in the street. Do you think that would qualify for loss of use?
Please check with your carrier.