What is Loss of Use in Home Insurance
You’ve probably heard of loss of use protection when purchasing your homeowners insurance policy. It may not have completely sunk in what it means for you if you ever need to take advantage of this valuable coverage.
Whether you are a homeowner or a landlord, loss of use insurance, sometimes referred to as additional living expenses or ALE, can be a life-saver when covered damage occurs to your home.
What Does Loss of Use Protection Include?
For homeowners who reside in their homes, loss of use protection takes on an entirely different meaning. When you’re displaced from your home while repairs are being made, this coverage can provide critical shelter and some degree of stability until you can return to your home.
These are some of the things your loss of use protection provides while you are unable to live in your home.
- Hotel expenses
- Rental home or apartment expenses
- Storage unit expenses
- Parking costs
- Additional food costs
- Pet boarding fees
In some cases, you may even be eligible for additional fuel or mileage expenses when you are displaced from your home by covered events.
When it comes to loss of use protection, the key is that it must be related to a covered event. For instance, since your home insurance doesn’t provide flood protection, if your home is flooded, you aren’t covered for these additional living expenses, even if you have a separate flood policy.
Does Homeowners Insurance Cover Plumbing Damage?
For this particular question, the answer isn’t simple. It depends on the situation. For instance, if you have a sudden or accidental plumbing problem, like a pipe burst or a broken hose to your washing machine, the water damage from your plumbing problems will be covered.
However, if it is the result of poor maintenance, your home insurance will not cover the damage or the repairs.
Home Water Damage Recovery – What Should Insurance Pay?
Depending on your specific insurance policy, your homeowners insurance should pay for the following types of home water damage recovery:
- Water damage from extinguishing fires.
- Water damage from frozen plumbing, pipe bursts, etc.
- Water damage from appliances (dishwashers, washing machines, water heaters, etc.) that overflow accidentally.
This type of damage is sudden, accidental, and difficult to guard against. However, your home insurance will not pay for the following types of water damage unless you have specialized insurance addressing these issues:
- Flooding
- Ground seepage
- Sewer backups unless covered by endorsement
- Poorly maintained plumbing
When covered events occur, your insurance will usually pay to remediate at least some of the mold damage caused by the water in your home. However, it’s a wise plan to study your policy carefully to see what kind and how much mold protection it offers.
Is Fair Rental Value the Same as Loss of Use?
Loss of use protection for landlords who can no longer rent their property due to covered losses (fire, windstorms, etc.) are eligible to seek reimbursement. They can seek compensation from their dwelling fire insurance policies for up to 12 months after the loss took place – as long as the property is under repair during that time.
This policy ensures that landlords will be able to continue to meet their financial obligations during this critical time when they are unable to rent their homes to tenants.
How to Get Loss of Use Reimbursement
One of the most important things to remember when it comes to a loss of use claims is that receipts are everything. While this insurance does cover reasonable additional expenses related to the loss of use of your home, it will not cover outrageous costs during this time.
We will work with you to make the claims process as painless as possible. You’re going through enough at this volatile time in your life. Our goal is to help you recover as quickly as possible.
Just remember that this insurance is about covering the extent of your additional living expenses. If you normally spend $2,000 on food and housing for the month and you spent $2,500 during the month when your home is not habitable, the insurance company will generally offer you $500 to cover the difference.
You’re still responsible for your normal expenses, such as the mortgage on your home, your home insurance, etc. This coverage is about providing for your other expenses during this uncertain time.
For landlords seeking reimbursement for loss of rental income, you’ll need to provide bank documentation, tax forms, and lease agreements to support your claim and identify the dollar amount of income you’re losing each month while repairs are underway.