This Is the Fastest Way to Get Reimbursed After Losing Your Home
"Hearst Magazines and Yahoo may earn commission or revenue on some items through these links."
When disaster—be it a wildfire or a burst pipe—hits home, the expenses quickly add up. Even if you grabbed the essentials you need to evacuate, you’ll need a place to live and a way to get around. You may need clothes to wear until you can get back into your closet, and it's possible that you'll need to find a safe place for your cat or dog to stay. If the catastrophe was covered by your homeowners' or renters' insurance policy, then loss of use coverage, aka additional living expenses (ALE) coverage or coverage D, may reimburse you for these costs and more.
A homeowner insurance policy typically provides two primary coverages: the dwelling and its contents. Insurance brokers usually describe it this way: If you were to turn your home upside down and shake it, anything that would fall out is the contents, and the rest is the dwelling. Your policy also likely provides additional coverage like ALE or loss of use coverage. This isn’t what gives you money to replace your home’s contents; that’s the claim you’ll file. But it will reimburse you for things you need while your home is being repaired and your claim is being processed.
Make sure—and we cannot stress this enough—to keep receipts for everything. Read on to learn what loss of use coverage is and how it can help in an emergency.
What Is Loss of Use Coverage?
The purpose of loss of use coverage is to reimburse you for extras you need after a disaster makes your home uninhabitable. Most homeowners' and renters' insurance policies include this; it’s not a special feature only the most expensive policies have. It applies to expenses like temporary housing and additional travel, and it even covers some things you might not expect, like the cost of boarding your pet at a kennel, as Chubb explains. Essentially, it makes up the difference between what you typically spend and what you have to spend in an emergency. For instance, if your mortgage typically costs $6,000 a month but you pay $7,500 to stay in a hotel, it will pay you back for the $1,500.
It may also reimburse you for some things you’ve lost. For instance, loss of use coverage might continue to give you the equivalent of your usual monthly rental income if your tenants are displaced.
Your home doesn’t have to be hit directly for loss of use coverage to apply, either. Loss of use coverage typically kicks in when you can’t access your home due to a covered cause of loss, such as a fire.
How Do I Know If I Have Loss of Use Coverage?
The majority of homeowners' and renters' insurance policies include loss of use coverage or ALE. How much it covers may vary. ALE coverage may have a fixed limit, be capped at a percentage of your policy’s overall dwelling limit, or be limited to a specified number of days or months. You also may need to meet a deductible first. For specifics, check your policy documents or ask your insurance broker. If you bought your policy directly from the insurance carrier without a broker and have reported a claim, ask your adjuster.
What Isn’t Covered by Loss of Use Coverage
The event that caused the damage has to be covered by your policy. In most cases, you need to have specific flood insurance to be covered in case of damage from flooding or groundwater, including loss of use coverage.
Belongings that were damaged and need to be replaced—say furniture and clothing that burned in a fire—fall under your policy's contents coverage, not ALE.
Follow House Beautiful on Instagram and TikTok.
You Might Also Like
