Home Insurance Articles

What Additional Costs Are Covered By Your Home Insurance Policy If Your House Becomes Uninhabitable

2010-04-01

If your house ever becomes uninhabitable, you may be reimbursed for your additional living expenses through loss of use coverage, also known as Coverage D. The amount of liability under loss of use coverage is based on Coverage A, dwelling coverage. Coverage D typically has a limit of 20% of Coverage A. If a house is insured for $300,000, then a person can expect a maximum reimbursement of $60,000. The policyholder may increase the loss of use coverage limit as an option under his or her home insurance policy.

You are entitled to loss of use insurance when your home becomes uninhabitable due to damage cause by any peril covered by your home insurance policy like wind, fire or lightening damage. You may also receive loss of use coverage when you are ordered to evacuate by lawful authority like the fire department. Extensive damage or the loss of important facilities, like the bathroom, is an acceptable reason for a house being rendered uninhabitable. If the home insurance company feels that the reason for the house being uninhabitable is unacceptable, they may deny your claim.

Loss of use home insurance coverage reimburses the policyholder for expenses incurred while living outside of his or her normal home. Loss of use coverage does not cover all living expenses, only those beyond the regular expenses of the policyholder. If a family incurs $500 worth of restaurant bills while waiting to return to their home, and they normally spend $300 on groceries in the same time, they will receive a $200 reimbursement. Similarly, the insurance company will pay only for the policyholder to maintain a normal standard of living; this includes accommodations similar to the home covered under the home insurance policy. The owner of a small one-bedroom house shouldn't expect to have their stay at a luxury resort reimbursed. A family of four who lives in a four-bedroom house should expect their stay in a moderately priced hotel to be fully covered. Loss of use coverage also reimburses the policyholder for expenses that may arise while living away from home like laundry and dry cleaning costs, parking fees and additional transportation fees that may occur if the temporary residence increases the policyholders commute or travel time. Moving and storage cost are also covered under loss of use coverage.

Loss of use coverage may also cover money lost if a section of the property covered under the home insurance policy that was rented becomes uninhabitable. In this event, the policyholder may elect to receive reimbursement equal to the fair rental value of the portion of the premises that was rented. This amount is normally adjusted by subtracting the utility bills. Ask your insurer what coverage you have.