What is Loss of Use insurance coverage?
Loss of use pays to maintain your standard of living while your residence is being repaired or rebuilt in the event of a covered claim. In most cases, loss of use covers the excess of what you usually spend on certain things.
For instance, let’s say your home is being repaired for water damage. You’re unable to cook, so you’ve been dining at the hotel restaurant. You usually spend $300 a week on groceries, but your tab at the restaurant was $600. Your loss of use coverage would cover the difference—$300. Typically, there is no deductible on loss of use coverage.
Examples of loss of use/additional living expenses:
- Temporary housing (hotel or rental home)
- Additional fuel costs
- Utilities
- Food (groceries, restaurants, cooking supplies)
- Storage
- Moving costs
Coverage limits for loss of use:
On a homeowner’s policy
Loss of use is often restricted to 10%—20% of your dwelling coverage, the amount on your policy to repair/rebuild your home. For example, if you have $200,000 for dwelling coverage, you would be covered up to $20,000—$40,000 on a loss of use claim.
On a condominium policy
Limits for loss of use on condo insurance work are similar to homeowners’ policies. Some condo insurers will combine your dwelling coverage and personal property coverage. For example, if you have a $60,000 limit for your dwelling and a $30,000 limit for personal property, you’ll get 20% ($18,000) of the combined $90,000.
On a renter’s policy
Depending on your insurance company, it can be a flat amount (between $3,000 and $5,000) or a percentage of your personal property coverage.
Loss of use coverage on a rental property
Landlords are eligible for reimbursement of lost rental income through their loss of use coverage on a rental property. This applies to covered loss only, up to the policy’s limits. A covered loss means something your insurance company pays for or “covers.”
