Loss of use in home insurance is a way for homeowners to have their expenses paid while they are waiting for their home to be repaired. This may be included in your standard policy with limits, or you can purchase a separate loss of use policy at an additional cost. It is helpful to understand what loss of use coverage in home insurance means and what the policy does and does not cover.
What Is Loss Of Use Coverage?
Loss of use coverage, also called additional living expenses (ALE) coverage, is a homeowners insurance policy that covers the additional indirect costs that result from a covered event. For example, if you (and your family and pets) are forced to leave your home after a major storm, then loss of use coverage covers your living expenses, food expenses, etc., while your home is being repaired. Loss of use coverage only applies if the reason you are forced to vacate your home is covered by your policy. Many providers include loss of use coverage with the standard homeowners insurance, although they typically have a strict limit. You can raise your coverage limit at an additional cost.
What Does Loss Of Use Coverage Include?
Loss of use coverage includes temporary housing, public transportation, pet boarding and food expenses associated with the claims process, particularly if those who live in the home are forced to vacate while the repairs and replacements are made. While these are four key components of loss of use coverage, it may also include additional coverages related to any covered claims that are made as well.
If your home is damaged to the point where you can no longer reside in it until the repairs are made, then your loss of use coverage should cover temporary housing. This includes the costs of any lodging accommodations you must make, such as paying for your family’s hotel. There may be a limit to your loss of use coverage, so it is important to understand the limit and choose your temporary housing according to what your limits are, so as to avoid spending too much out of pocket.
Loss of use coverage also covers public transportation. This may be necessary if your vehicle was damaged as well as your home, or if you do not own a vehicle and are required to use public transportation to get around. The types of transportation costs that may be included in your loss of use home insurance policy include:
- Car rental costs
- Fuel costs
- Public transportation
- Parking costs
Often, the homeowner pays for the expenses initially, and the loss of use insurance reimburses the policyholder after a fair amount of the expenses are already paid for. However, the insurance provider may provide the funds upfront if the policyholder is not able to cover the essential costs initially.
If you own pets, then you may need to arrange for their care while you are away from your home. If you have to stay somewhere temporarily that does not allow the type of pet you own, then you may need to find a place to board your animals while your home is restored. For example, a homeowner that owns horses may need to pay the boarding cost for two weeks while their home is repaired after a major storm. Loss of use coverage will reimburse or cover the cost of the boarding upfront, although limitations may apply depending on the extent of your coverage.
When you do not have access to your home kitchen, meals for the entire family can become difficult. This can lead to you paying higher costs for food. Loss of use home insurance may cover the cost of food and drinks as well during the duration you are out of your home.
What Does Loss Of Use Coverage Not Cover?
Your loss of use coverage only applies if the reason you leave your home is covered by your policy. For example, coverage does not apply if you leave your home while you are remodeling your house for personal reasons that are unrelated to your policy. Loss of use coverage typically does not apply for flooding either, as this is typically a separate policy from your homeowners insurance. Loss of use coverage is typically not an option for pest infestation and earthquake damage either. It is also important to understand your coverage limits as well.
Speak With A Member Of Our Insurance Team
If you would like to learn more about coverage or home insurance in general, then call our team at Merchant Family Agency today. We are glad to answer your insurance-related questions and help you make an informed choice about your home insurance coverage.