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Coverage D - Loss of Use Coverage
Home is a very important asset we possess. It is not only an indicator of our social status, but most importantly, it is the place where we spend the best part of our life, the place that gives us comfort, the place we rush to after a business trip or a vacation. Even if we are not keen on or directly involved in nest building, we still aspire to preserve our home as a place for privacy, for mental and physical relaxation. In our attempt to secure the feeling of home we commonly think that having obtained a Homeowners Insurance we can be sure we will get financial assistance in repairing or rebuilding our home and restoring the homely atmosphere we are used to. But we often neglect the possible adverse effect of a loss inflicted to our home - a financial burden we have to incur to find and rent a place of living while our home is being restored or rebuilt. This is when Loss of Use Coverage can help solve your problems taking off at least part of the financial burden you have to shoulder should something happen to your home.
The remarkable feature of Loss of Use Coverage is that it reimburses you for additional living expenses while you are living away from your home because your home is unfit for living due to a covered reason of loss. It is of prime importance that this type of coverage applies only when your home is uninhabitable. If the condition of your home is questionable and allows objections as to its being unfit for living, it can trigger reluctance to reimburse you for your living expenses on the part of the insurer. In such cases you may be required to present a prohibition to live in the dwelling issued by legal authorities in your area.
"Additional living expenses" are defined as any necessary expenses you incur due to a covered loss so that your household can maintain the habitual standard of living. Additional living expenses usually include hotel and restaurant bills. Transportation expenses can also be included in the scope of Loss of Use Coverage. Besides, Loss of Use Coverage comes into effect if you are forced to leave your home due to the fire threat or any other threat coming from an adjoining dwelling. But in this case local authorities must give evidence of the imminent danger. Another important provision stipulated in Coverage D ensures that if the dwelling is subject to a covered loss when you are still paying a mortgage for it, Loss of Use Coverage will help you to keep up with your mortgage payments.
Basically, Loss of Use Coverage has two options you can choose from. The first option, described above, reimburses you for the expenses associated with renting a temporary residence while your home is being rebuilt or repaired. The second option is known as Fair Rental Value. It is effective when part of the covered dwelling, damaged or destroyed due to a covered loss, was rented out. In case of a covered loss, Fair Rental Value will reimburse the owner a dollar amount equal to what the owner could have received as a rent payment for the damaged part of the house.
One more important detail that needs shedding light on concerns one's eligibility for Loss of Use Coverage. Who is protected under Loss of Use Coverage in a Homeowners policy? On average, this coverage is available to the same people who are eligible for other types of coverage under a Homeowners Insurance contract (for example, dwelling, property and liability protection). This type of coverage usually requires a separate premium, unless it is added to your policy by endorsement with its own conditions of payment.
Loss of Use Coverage can be offered in combination with additional coverage of different types. Additional coverage usually includes such occurrences as property collapse, reasonable repairs, debris removal and some others. All additional endorsements added to your policy affect the premium cost. You should know that a greater scope of insurance coverage results in a higher premium.
Attractive as it looks; Loss of Use Coverage has its limitations. Thus, Loss of Use Coverage is usually restricted to 20% of your Dwelling Coverage. Besides, some policies provide Loss of Use Coverage only over a given period of time. It usually happens when in some areas where the risk of a covered peril is high; the number of claims from people displaced from their homes is so great that the insurance companies have to limit the length of time during which they will reimburse the expenses for temporary shelter.
Some insurance companies establish additional conditions for people who want to secure their home against any situation when it may become uninhabitable. The requirements typically include cutting down big trees growing not far from the house, improved roofing, precautions against windstorm or a fire. Such conditions are introduced to minimize the risks of losing your property.
These are the major guidelines on how the Section D of your Homeowners policy works. To have a clear picture of Loss of Use Coverage, read the provisions of your policy carefully. The coverage particulars will also help you to determine cost-efficiency of this type of coverage. You will find either the dollar amount or the percentage of coverage indicated on the Declaration Page of your Homeowners policy.
You know that even with a pragmatic approach to problem-solving we are usually not prone to concentrate on possible negative consequences of a potential peril. That is why we often overlook Loss of Use Coverage and do not attach great importance to it when choosing a suitable type of coverage or a combination of them. But practice shows that this type of coverage can be really cost-effective, to say nothing about the convenience it offers. If you are still doubtful whether this type of coverage is for you, you should know that Coverage D, in this case usually referred to not as "Loss of Use Coverage" but as "Additional Living Expenses Coverage", can be found as a special provision in other Homeowners policies. If you really want to secure your home, do not turn down this coverage right away. It can spare you a lot of problems.