Loss of Use: Where Do You Live During a Claim?

Loss of Use

Safeco insurance defines Loss of Use coverage as follows:

Loss of Use coverage as any additional living expenses, meaning any necessary expense that exceeds what you normally spend. For example, you usually spend $300 per month for groceries. While your home is being repaired, you spend $400 a month since you have to dine out instead of cook at home.

Also know as additional living expense. Loss or deprivation of use happens when an insured is displaced from their home due to a claim for an extended period of time resulting from a claim, the insurance company will pay any necessary premium to ensure the quality of life is not diminished.

Claim Situation

The Franklin’s have a partial fire caused by frayed wires within their drywall. The fire totally destroys the living room and dining room. During the remediation and fixing of the claim the Franklin’s are relocated to a nearby hotel. The total to rent a room per night is $150 dollars. The Franklin’s are also forced to order out for their food due to the lack of kitchen space in their hotel room. On average they spend $100 dollars per day on their food expense.

The claim takes 1 month to be resolved. In total the Franklin’s have been displaced from their home for 28 days. The total cost of the hotel was $4,200 and food was $2,800. Plus a few other unexpected expenses like, tolls and gas the total cost of living was $7,342. The Franklin’s pay $1,100 for their mortgage currently and it is estimated their food bill per day now is $65

RECAP

– $1,100 (Mortgage)
– $1,820 (Food)

= $4,422 (Total Loss of Use)

The total limit of liability can be negotiated before purchasing the policy. In many situations companies will list the coverage as ‘Actual Loss Sustained’. This means there is no exact dollar amount and they will cover up to any amount. The coverage in most cases will span the length of 12 months. It is in the home insurance companies best interest to resolve a claim as quickly as possible to avoid having to pay out an exorbitant amount.