Loss of use coverage is an essential yet often overlooked part of homeowners and renters insurance policies. Also known as additional living expenses (ALE) insurance or Coverage D, this coverage is designed to provide financial assistance when your home becomes uninhabitable due to a sudden problem, such as a natural disaster or fire damage. Whether you're new to insurance or looking to better understand your policy, this list will guide you through four important things to know about loss of use coverage and how it protects you in challenging situations.
Covers More Than Housing
Loss of use coverage is usually associated with paying for temporary housing costs, such as a hotel or rental property. However, its coverage extends to other expenses related to being unable to live in your home. Examples of covered expenses include:
- Groceries and restaurant meals
- Laundry
- Pet boarding
- Gas
- Parking fees
- Public transportation
- Temporary storage units
- Moving costs
These additional benefits ensure that your everyday life can continue with minimal disruption, helping ease the financial burden during an already stressful time.
Determined by Dwelling Coverage Limits
The amount available for loss of use coverage is often tied to your policy's dwelling coverage limits. Insurance providers typically set coverage limits ranging from 10 to 30 percent of the monetary value required to rebuild your home, as determined by an agent or an appraiser.
For a renters insurance policy, this limit may be set as a percentage of your personal property coverage amount, which is the estimated value of your personal belongings. Review your policy’s default amount of loss of use coverage and make necessary adjustments based on estimated costs to temporarily house yourself and your family.
Protection Is Limited to Covered Perils
Loss of use coverage only applies when the damage to your home is caused by a peril specifically covered by your insurance policy. Common covered perils include fire, theft, and certain types of water damage. However, events like earthquakes or floods may require separate coverage. Consider addressing gaps in your homeowner or renter insurance by determining if your area is prone to perils not covered in your policy and purchasing additional coverage.
Insurance Providers Require Receipts
To receive reimbursement for your expenses under loss of use coverage, you’ll need to provide documentation to your insurance provider. This means keeping receipts for hotel stays, meals eaten out, and any additional qualifying costs.
Insurance companies won’t reimburse expenses without sufficient proof, so it’s vital to maintain detailed records. Many insurers even encourage policyholders to submit expenses as they occur to ensure timely reimbursement.
Loss of use coverage is an invaluable safety net when you're unexpectedly forced out of your home. By understanding how it works, what it covers, and how to optimize its benefits, you can maximize the value of this policy feature. Saferoad Insurance provides affordable California renters insurance to protect tenants from the unexpected. Contact us today to learn more about our coverage options.