What Is Loss of Use or Additional Expenses?

Your homeowner’s insurance policy includes Coverage D- Loss of Use. Some insurance carriers call this Additional Expenses but the same coverage rules apply.  If you suffer a covered property loss that makes your residence uninhabitable then your policy will provide reimbursement for the expenses you incurred relating to maintaining your normal standard of living. Some examples we have seen of this were expenses for apartment/hotel rental, laundromat and food. The key word is uninhabitable. If you have covered damage to your kitchen but all your appliances are still in working order and your kitchen is still accessible then you would not be eligible for reimbursement of food expenses under loss of use coverage.

Let’s look at a different scenario. If you own a home that you rent to others then you might see Fair Rental Value in the place of Loss Of Use on the insured properties declarations page. Damage that makes the rental home you own uninhabitable may not directly affect you. Your home is still livable. Your appliances are still working.  You are still able to take care of your daily needs; however, you have lost the rent income from your rental home when the tenants had to find another place to live during repairs.

Another place you will find coverage for loss of use is on your auto policy. On the auto policy loss of use falls under the coverage named Transportation Expense. You might also see this coverage labeled Rental Reimbursement. The reason it is considered loss of use is because this coverage only comes into play when your vehicle is “out of use” due to a covered claim. You cannot collect rental reimbursement for a vehicle you rented to take a trip in simply because you didn’t want to put mileage on your vehicle. You can collect rental reimbursement when you had to rent a car while your vehicle was in the shop for 2 weeks after you were involved in a collision.

Contact your agent if you have more questions about loss of use coverage and when it applies!