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 or “additional living expense” coverage. You are entitled to loss of use coverage when your home becomes uninhabitable due to damage caused by any peril covered by your home insurance policy such as wind, fire or lightning 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.
Standard loss of use coverage pays or reimburses you for any additional living expenses you incur during the time it takes to repair or rebuild your home or relocate to a new home. Most policies have a limit on the amount of time covered, and a fixed amount of liability based on a policy’s dwelling coverage (Coverage A).
The following types of expenses are typically covered under loss of use coverage:
- Temporary housing including hotels, motels, and leased premises
- Moving costs and temporary storage of personal property
- Meals where the costs exceed the amount you would pay if you were living in your residence.
- Laundry and dry cleaning expenses
- Parking fees
Loss of use coverage does not cover all living expenses, only those beyond the regular expenses of the policyholder.
If you rent part of your residence, landlord insurance or optional fair rental value coverage will reimburse you for the amount of rent you would have received if your residence had not been damage. 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.