Home Insurance Articles
The Function Of Loss Of Use Homeowners Insurance Coverage
2010-07-29
When looking at home insurance quotes, it's a good idea to pay attention to the loss of use coverage. While this type of coverage is often ignored by policyholders, it can provide extremely important financial protection after a serious homeowners insurance claim, and it's usually a relatively inexpensive part of a policy.
Loss of use coverage provides for costs that a homeowner may take on while repairs are being completed after a significant claim. For example, if a homeowner's house burns down, the homeowner may need to rent temporary housing, and loss of use coverage should provide for those costs. Loss of use coverage can sometimes carry limits, so it's important to understand how long your coverage will work for you. If your coverage runs out after a few months, you may have to rely on your personal funds while your home is rebuilt. Coverage may be limited to a dollar amount. Your homeowners insurance company may get to decide where you stay while loss of use coverage is in play. Usually, the company will pay for "reasonable expenses," meaning that a simple motel would be covered, but a four star hotel wouldn't be covered. Before you rent a room anywhere after making a major claim, contact your insurance agent and discuss the matter. This will help you to avoid any costly mistakes that could compromise the effectiveness of your loss of use coverage, and it will allow you to stay sheltered with peace of mind while your home is repaired or rebuilt.
Before buying loss of use coverage, check to see how it will affect your homeowners insurance premiums. Most insurance companies don't charge too much for loss of use coverage, as it's a relatively small cost for insurance companies compared to the other costs that they'll take on in the event of a major claim. You may have the option of several levels of loss of use coverage with different limits. A good way to decide which coverage to buy is to run through a hypothetical scenario. Imagine that you need to be out of your house for a few months while repairs are completed. Think about where you would need to stay, how close you'd need to be to your work and other factors that might determine your costs. It can also be helpful to get a few home insurance quotes to compare the costs and benefits of loss of use coverage. Take the time to make a careful decision about your loss of use coverage, and talk over the matter thoroughly with your insurance agent before accepting a quote.