Glossary
Loss of use coverage, defined
The part of a home, condo or renters policy that pays the extra cost of living elsewhere when covered damage makes the residence unfit to occupy.
In practice
It has three parts. Additional living expenses pays the increase in what it costs to keep the household running: rent, extra mileage, laundry, meals beyond normal. Fair rental value pays a landlord the rent lost on a unit tenants cannot occupy. Civil authority pays when officials bar access to the neighborhood after a covered peril nearby, for a short set period. On most home forms the limit is a share of the dwelling amount; renters and condo forms state a dollar limit or a time limit. Keep receipts, since only the amount above normal expenses is paid. It does not apply when the reason for leaving is not a covered peril, such as a flood on a policy without flood coverage.
A worked example
Suppose a kitchen fire forces a family out for five months. They rent a comparable house for $2,500 a month while their $1,800 mortgage continues. The policy pays the $2,500 rent plus extra costs, because the mortgage was already a normal expense. Hypothetical figures.
Applies to: Home InsuranceRenters Insurance