If a disaster such as a hurricane, tornado, or fire strikes your home, you may find it temporarily uninhabitable, or even destroyed. Imagine if you have to live someplace else while your home is being repaired—how will you pay for the extra living expenses? Many homeowners insurance policies contain coverage to help you pay for those additional expenses. It’s called “Loss of Use,” “Part D,” or “Additional Living Expenses” coverage. Not all policies include it, but many do.
Here are the three types of coverage that make up Loss of Use:
Additional living expense—reasonable expenses you incur to maintain your family’s standard of living if you must live elsewhere while your home is being repaired. These expenses include things like rent or hotel bills, restaurant or grocery bills above and beyond what you’d normally spend, laundry bills, parking fees, or the cost of storing your belongings while your home is being repaired.
Fair rental value—if you own a tenant-occupied home or rental property and the covered loss makes the rental premises uninhabitable, the insurer will cover the lost rental income. Expenses which will not continue, such as what a tenant pays for utilities, will be subtracted from that reimbursement.
Prohibited use—if you must stay elsewhere when a civil authority, such as a government agency or the state police, prohibits you from accessing your home in a damaged neighborhood, even if your own home is unharmed.
Things to remember:
- Loss of Use is only payable if the damage was caused by an insured peril. This does NOT include flood, which is normally excluded on a standard homeowners insurance policy. Federal flood insurance also excludes additional living expense coverage, but some private flood markets are starting to provide some Loss of Use coverage in their policies.
- Most policies cap the amount of Loss of Use coverage, often at a percentage of the limit of insurance carried on the dwelling.
- No deductible applies to Loss of Use coverage.
- Loss of Use extends beyond the policy term limits if the covered loss occurs before the policy’s expiration date.
Loss of Use can be an important coverage to have if you’re ever faced with a serious homeowners claim. Since coverage terms vary, you may want to discuss with your Lakewood Financial agent whether or not your homeowners insurance coverage is appropriate for your situation. Please call us at 941-747-4600, or contact us if you have any questions.
With Hurricane Harvey fresh in our minds, the Sarasota/Bradenton area is on alert watching the path of Hurricane Irma. While the effects of wind, such as damage from fallen trees, is likely covered under your homeowners insurance policy, less your deductible, damage from flooding is not. Therefore flood risk should be on everyone’s mind.
Part of our preparations for Hurricane Irma should include planning for the possibility of flooding. Here are a few things you can do to before the storm arrives:
- Evaluate your flood risk. How likely is it that your home or business will flood? Even if you’re not in an official flood zone, you still might be at risk for flooding under the right circumstances. Twenty-five percent of all flood claims come from the preferred zones B, C and X.
- Know how to stay informed with alerts and information, whether you monitor local radio or TV stations, or listen to a NOAA Weather Radio All Hazards receiver. Make plans for how you’ll stay informed if the power goes out.
- Understand the difference between a flood watch (flooding is possible in your area) and a flood warning (flooding is happening or is about to happen in your area), and be prepared to evacuate if public officials tell you to do so.
- Know your best evacuation routes, and plan ahead of time where you’ll stay if you have to evacuate.
- Make a plan for communicating with friends and family. Write down and keep with you copies of important numbers, don’t just store them in your phone.
- Gather items you’ll need to take with you if you have to evacuate. Include clothes, food, water, first aid items, money, phones and chargers, and important documents such as insurance policies, home inventories, personal identification, and prescriptions. Also include any irreplaceable items like pictures or other mementos.
- If you have valuable or sentimental items you’re not taking with you, bag them or put them in plastic bins if possible, and place them in the highest safe spot in your home.
- Consider buying flood insurance for the future. Lakewood Financial represents several private companies that write flood insurance policies at a more competitive rate than those of the National Flood Insurance Program (NFIP). These policies also have higher available limits than the NFIP’s standard policies. (Click here for a flood insurance quote.)
According to insurance experts, only about 20 percent of the victims of the devastating floods in the Houston area following Hurricane Harvey had flood insurance. The remaining 80 percent will have to find a way to rebuild with only the possibility of federal disaster relief, which comes in the form of low-interest loans which have to be repaid, or Federal Emergency Management Agency (FEMA) disaster grants, which are typically not nearly large enough to cover the damage.
Floods are America’s most common and costly natural disaster, according to FEMA. They cause millions of dollars of damage a year, and can happen anywhere. Don’t wait until the water’s rising to prepare.
Give Lakewood Financial a call at 941-747-4600 if you have any questions about flood insurance, or if you’d like a quote. We are here to help.