NY home insurance policies offer a variety of coverages guaranteeing reimbursement for damage done to your home as long as it is covered under the policy. But, what happens when a loss is so catastrophic that your home becomes inhabitable? Who is going to pay for those additional living expenses incurred from the loss? Luckily, most, if not all, NY home insurance carriers include loss of use coverage.
The swift answer is, it doesn’t. Loss of use does not cover physical damage to the dwelling or the contents of the home. Loss of use would be in effect when a loss covered under your home insurance occurs and you are not able to access your home. Additionally, it may cover you in cases where government prohibits use of the premises for an extended period of time.
Loss of use insurance coverage will cover any additional expenses incurred due to the loss under your NY homeowners insurance policy and inability to use the home. For example, if you have a house fire and are forced to live at a hotel, your NY home insurance company will help pay for this expense. Loss of use does not apply for normal expenses, that is, for things that you would still be paying for regardless of the situation. For example, any utility bills would still be your responsibility. However, coverage would account for any increase in a regular expense. Let’s say, due to having to stay in a hotel your commute to work is further and the amount you are spending on gas increases. Your NY home insurance company will cover the difference.
In certain situations it may also cover loss of rental earnings if the portion of the home that is rented is also inhabitable. This is called “fair rental value”, meaning the fair rental value of that part of the residence premises rented to others or held for rent by you. If, due to a covered loss on your NY home insurance you are being reimbursed for loss of rent, the amount will equal the fair rental value less any expenses that do not continue while the premises is not fit to live in.
During the time of the loss, be sure to hold on to all of your receipts so you can submit them to your NY home insurance carrier and they can review the information to calculate your payout. Depending on the insurance company, the method to calculate your “normal living expenses” may differ. Nonetheless, there must be some barometer with which to measure the increased expense. You may be required to submit proof of your regular monthly expenses to your NY home insurance company. In most cases there will not be reimbursement for something that is not considered to be a necessary and reasonable expense. In other words, you won’t want to live frivolously during this time with the expectation that all will be paid for without question. Furthermore, you should be aware that in most cases your NY home insurance company will reimburse you after an expense is incurred rather than upfront.
Keep in mind that this article is broad in its discussion of NY home insurance and loss of use coverage, and each and every case can be different. Your coverage depends on the situation at hand and the specifications of your policy as outlined in your policy booklet. For further information, please contact your insurance carrier.
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