Loss of Use Coverage on the Homeowner’s Policy

loss of use coverage

One tragic event, such as a fire engulfing your home, turns your living situation upside down. What type of insurance coverage do you turn to in this situation?

Assuming you purchased homeowners insurance, your loss of use coverage on your policy should cover situations where your home is inhabitable.

  1. If a fire engulfs your bedroom and you can no longer safely live on the premise, the cost to live at a hotel while repairs are being made is covered as an additional living expense on your policy.
  2. If you have a tenant who can no longer stay on the premise due to a fire destroying his portion of the home, the fair rental value amount of the premises less any expenses that do not continue while it is not fit to live in to the owner of the property.
  3. Sometimes, loss of use coverage will come into play even when your home has not experienced a loss. For example, a wildfire is engulfing neighboring premises and is threatening the neighborhood where you live. The authorities respond by not allowing people in the threatened area until the danger passes. Since you were prevented from inhabiting your home, you can file a claim under loss of use to receive reimbursement for time spent in a hotel. The maximum time period for this coverage is two weeks for any one event.

In general, a homeowners policy will offer loss of use coverage as a percentage of the limit of insurance carried on the dwelling (coverage A) of a policy; the most common percentage being 30%. Once you can inhabit the home, coverage ends and hopefully life returns to normal

If the part of your home that was destroyed belonged to a renter, personal property would not cover their belongings because it is expected that they purchase their own renter’s insurance policy to cover those items. The policy would, however, provide “tenant’s relocation expense” of up to $750.00 per unit.

Need to discuss your homeowner’s policy? Call or text H&K Insurance at 617-612-6500 and one of our personal lines agents would be happy to assist you!