On virtually every NY homeowners and renters insurance policy you’ll notice a coverage called “Loss of Use” or sometimes named “Additional Living Expenses”. This particular coverage is typically included as part of the policy package at a percentage of dwelling coverage limit.
With a homeowners policy this limit is normally between 20 and 40 percent of the dwelling coverage, on a renters policy it’s limit is typically calculated at between 20 and 30 percent of the insured’s personal property coverage amount carried. Each individual insurance carrier has their own predetermined percentage limit amount.
So what the heck is Loss of Use coverage it and is it important?
Yes, it’s a very important and misunderstood protection.
Loss of Use coverage helps to pay for increased costs of living if you are temporarily unable to live in your home due to a covered loss such as a fire or water damage among others up to the limit you carry on your policy. Depending on the scenario and length of time this coverage needs to be utilized, additional living costs can reach into the thousands to tens of thousands of dollars.
For illustration, lets say you have a fire in your home that creates significant damage to large portion of your home. It is unsafe for you and your family to live there until you home is restored and all damages are repaired or replaced. You will be out of your home for 10 months.
This is where your Loss of Use coverage will come into play so that you don’t have to pay more for living expenses than you would have paid if you were able to stay in your home for items like your monthly mortgage payment or rent along with a host of other things.
In this example, you monthly escrowed mortgage payment is $1,500 per month but it cost you $2,500 per month to rent a similar home in the area. With your Loss of Use coverage you should receive reimbursement of $1,000 per month from your insurance company to make up the difference between what you would have paid living in your home and what you have to pay temporarily for 10 months living away from your home. Over 10 months, that amounts to $10,000 in reimbursement.
Other Applicable Increased Costs Besides Mortgage or Rent Payments
There are a host of other increased cost items that essential and necessary that are reimbursable such as:
- Storage units
- Moving expenses
- Rental cars
- Pet boarding
- Daycare costs
- Temporary hotel stays
- Meals at a restaurant if no access to a kitchen
- Cost of laundry if no access to a washer and dryer
- Utility expenses if they are more than what you were paying at your permanent home
- Additional commuting expenses if you had to move further away from your permanent home
Loss of Use coverage is not commonly viewed as a “significant” coverage on a home or renters policy, but as you can see, is extremely important to those that need it after a covered loss at their home or apartment.
If you have any questions regarding auto, home and business insurance options, please contact us, we’re always glad to help. The NY Insurance Hub serves Albany, Schenectady, Troy, Latham, Cohoes, Watervliet, Clifton Park, Saratoga Springs, surrounding Capital Region areas and all of New York State from NYC to Buffalo.