The True Meaning of Loss of Use

During the recent fires in California, many homeowners were forced to leave their property because of mandatory evacuation orders.  Once past the shock of the event, reality starts to hit.  Until they can move back into their homes, the immediate question is “Where am I going to live?” followed instantly by “How will I pay for it?”  The answer is Loss of Use insurance, part of their home insurance policy.

Most standard home insurance policies include Additional Living Expenses coverage, which provides money if the home is damaged and can’t be occupied until it’s repaired.  But if the home wasn’t damaged, this coverage never kicks in. 

What Triggers Loss Of Use Coverage

Loss of Use pays for additional living expenses under specific conditions.  In the case of forced evacuation, the official reason is “Civil Authority Prohibiting Use.” 

While almost every policy includes Additional Living Expenses coverage, Loss of Use is not standard.  When checking out a new policy, see if Loss of Use is included, and if it is, make sure to get the details on the amount of coverage offered. For some plans, it may be limited by time, such as a two week period, while other plans will go by a specific dollar amount.

People living in an area that is prone to natural disasters like wildfires, mudslides or flooding should read the declaration page (top page) of the home insurance policy to confirm what’s covered and when.  A crisis is not the right time to discover you’re not protected.