There will come a time in most people’s lives when they get temporarily displaced from their primary residence. One of the most common is actually a feel-good story when it comes time to refurbish and improve your primary residence to the dream home you always hoped for. Of course fire, hurricanes, erosion, and other disasters cause people to be displaced from their homes. Regardless of circumstance, there are things to know about temporary displaced living insurance coverage options and why you should be covered by the same.
It is common for a displaced homeowner to rent property while awaiting repairs to their home when a natural disaster like an earthquake, a fire, or a hurricane forces them into the rental market. There are only a few differences between the rental procedure for displaced homeowners and the process followed by other renters. The following tips will guide a homeowner through the process of becoming a temporary renter.
One of the most important renters' tips for a displaced homeowner is to take advantage of "loss of use" coverage provided by a homeowner's insurance policy. Loss of use, or "additional living expense" coverage, will pay for the cost of living in another home. A homeowner may use this coverage under the following circumstances:
- Damage covered under the insurance policy makes the home uninhabitable; or
- A law enforcement agency or a disaster relief organization ordered the evacuation of the home.
While a home undergoes repairs or rebuilding, loss of use coverage will reimburse the policyholder for living expenses that exceed those that a homeowner would normally incur while living in their home. Covered expenses include temporary housing, the cost of temporary storage and moving, laundry costs, and the cost of some meals. Most policies place limits on benefits by enforcing time constraints or by restricting the maximum reimbursement to a percentage of the coverage amount on the home.
The type of housing the insurance provider will pay for depends on the severity of damage to the home. If it is possible to make repairs quickly, loss of use coverage will pay for a hotel stay. However, if it is impossible to fix the home quickly, the homeowner may use the coverage to pay for a rental. In general, the insurer will pay for a rental that is similar to the home the policyholder lived in.
Whether your reading this due to planned displacement from your home or you recently suffered unexpected damage, your independent insurance agent here in MD, DC and VA is ready, able, and willing to help you through it. You may already be partially (or totally covered) by your existing homeowners insurance policy. Sometimes it takes a pro to read through all that insurance red tape. We’re here for you. Contact us anytime you need help.