To Our Valued Clients and Friends
Many of us are currently under mandatory evacuation orders – which can mean that living expenses away from home can mount up quickly, especially for those not staying with family or friends.
The good news: loss of use coverage, which pays “necessary increases in living expenses,” comes standard in most homeowners’ insurance policies. Note the word “increase” – if your living expenses turn out to be less than they were when you were in your home, generally there’s no coverage for these costs.
In order for living expenses due to evacuation to be covered under a homeowners’ policy, the evacuation must be ordered by civil authorities. Flood insurance does not cover increased living expenses due to mandatory evacuation.
A few things to note:
- Loss of use coverage applies only when your home is unlivable due to covered damages, or when civil authorities have mandated that you leave your home. When the evacuation order is lifted, loss of use coverage ends unless your residence has sustained sufficient damage from a covered event to be judged unlivable.
- There is a coverage limit for loss of use – this is usually approximately 20% of your home’s insured amount. Beyond that limit, increased expenses will not be reimbursed. So, if your house is insured for $750,000, your coverage limit for loss of use would be approximately $150,000. You may want to forecast and budget, if you anticipate being away from home for an extended period of time.
- In addition to the coverage maximum, there’s a time limit as well – usually 12 months. And if your insurance company believes you have unnecessarily delayed moving back into your home once it is livable, expenses during that time period will not be reimbursed.
- Not all your expenses are covered – only those in excess of what you normally pay. For example, if your utility bills where you are staying are $300 per month, and you normally pay $200 per month when at home, only the difference – $100 per month – counts as an increase in living expenses. The same for your food costs – loss of use coverage will pay the increase, not the total expense.
- Loss of air conditioning does not of itself make a home unlivable for insurance purposes.
- Keep all receipts! Without them your insurer will not reimburse you.
Before filing a claim, check to be sure your expenses have exceeded your policy’s hurricane deductible –this may be between 2% and 4% of your hurricane-insured coverage. If not, there’s no real point in filing for reimbursement.
Again, I recommend strongly that you consult with us before making any tax or financial decisions in Ida’s wake. My direct line is 504-586-3051, and my cell is 504-442-3050.
Getting the right decisions implemented effectively is far better than getting something done immediately, which may in hindsight prove to have been less than an optimal decision.
Please click here to let me know how I can help you.
Until next time –