Connecticut Homeowner's Insurance - What is "Loss of Use" and Do You Have Enough?

We purchase Connecticut homeowners insurance to provide us with peace-of-mind from knowing that if we suffer damages from a covered loss, our Connecticut homeowner’s insurance will repair and/or replace what’s damaged and, ultimately, return us back to normal.  However, what happens when a loss is suffered that forces us to move out of our homes while these damages are being addressed?  Who picks up the tab for the additional living expenses we incur and how much will this tab be?

The Good News: A Connecticut Homeowner’s Policy Includes “Loss of Use” Coverage.

Many homeowners commonly overlook a very important function of their Connecticut homeowner’s insurance policy known as “Loss of Use” or “Part D” coverage.  This coverage will pay the necessary increase in living expense required to maintain your current standard of living while your home is being repaired.  For example, if you should have to stay in a hotel or a rental while your home is being repaired, “Loss of Use” would be the applicable coverage for this type of expense.  In addition, “Loss of Use” covers other things like restaurant bills and storage for items that need to be removed from your home during the time of repairs.  A Connecticut insurance professional can inform you of other things covered under “Loss of Use.”     

What’s the Bad News about “Loss of Use” Coverage?

Many Connecticut homeowners are not aware of the limitations for “Loss of Use.”  This function of the Connecticut homeowner’s insurance policy generally has a limit of around 20-30% of what is carried on the  “Part A” (Dwelling) coverage.  “Loss of Use” does NOT cover at 100%.  For example, if you have a coverage limit on your Dwelling of $250,000.00 and your “Loss of Use” coverage states that it is set at 20% of your “Part A” coverage, than the “Loss of Use” limit would be capped at $50,000.  In some instances, “Loss of Use” may also be specified as a flat dollar amount.  Homeowners who receive additional income by renting a portion of their home should also pay close attention to “Loss of Use” coverage.  It’s very important to speak with a knowledgeable Connecticut insurance professional about this coverage and other limitations that may apply.

The Important Question…

How do you know if your “Loss of Use” coverage is sufficient?  Unfortunately, there isn’t one quick answer to that question. Many variables should be considered.  In other words, if the damage is bad enough to make your home uninhabitable, you may be out of your house for an extended period of time.  In addition, changes to building codes, permit requirements, and a variety of other factors could cause the process to move slowly.  There isn’t a definite answer when it comes to the expense of being temporarily relocated.  You can consider the fact that a common rent for a smaller property runs around $1500-$2000 per month and the standard hotel room is around $200-$250 per night.  If eating out is required, this can certainly add more expense than the average cost of groceries.  If storage is required, this would also add extra expense.  The last thing you want to hear is that your Connecticut homeowner’s insurance “Loss of Use” coverage has run out before you can go back home.  This could be a serious problem for most homeowners.  

How Can You Learn More?

We highly recommend speaking with a knowledgeable Connecticut insurance professional about “Loss of Use” coverage.  An experienced professional will have a thorough understanding of this coverage and the exposures.  He or she can help you weigh your options and make informed decisions about your coverage.

For more information regarding this blog, please contact V.F. McNeil Insurance at (203) 481-2684 to speak with one of our friendly insurance professionals.  We are always happy to help.

Source: Trusted Choice