What Montana Property and Business Owners Need to Know
What is loss of use coverage?
Loss of use coverage is part of a homeowners insurance policy that covers
your living expenses if your home becomes inhabitable due to a peril such
as house fire or natural disaster (hurricane, tornado, wind damage, etc.).
Also known as Additional Living Expenses (ALE) or Coverage D, loss of use
coverage provides reimbursement of the cost to live temporarily at a hotel
or comparable property to your home. It includes other living expenses
too, like moving costs and food.
What is the difference between loss of use coverage and business
Both loss of use coverage and business interruption are types of insurance
that cover expenses incurred due to an unexpected event that causes damage
to the property. Loss of use coverage is meant for homeowners and as the
name implies, business interruption insurance, also known as business
income coverage, is for businesses.
As stated above, loss of use coverage provides payments for homeowners
during the period in which their home is being repaired or rebuilt. It
covers temporary living expenses. Business interruption insurance helps
business owners recover after a forced closure (due to covered events) by
providing payments to make up for lost income and to temporarily pay
employees who can no longer work due to closure.
Both loss of use coverage and business interruption insurance cover
financial costs during the restoration of the home or building but do NOT
cover costs of the repairs and rebuilding. While some policies may combine
various types of insurance, the cost of labor and materials of rebuilding
your home or business is a separate coverage that may or may not be
included in homeowners insurance or commercial property insurance.
Just like other types of insurance policies, there is a coverage limit.
The coverage will last however long it takes to to repair or rebuild your
home or restore your business, unless you reach the limit of your policy.