By Robert Dornan
You can’t control every aspect of your living situation as a renter. Even if you make an attempt to keep your apartment in good shape, everything from a burst pipe in the building to a violent storm could potentially render it uninhabitable.
That’s why it’s important to have renters insurance. These low-cost policies (the average cost is $12/month) often cover living expenses if you need to suddenly relocate to a hotel room or similar space.
That said, it’s important to understand what the word “uninhabitable” means in renters insurance terms. These points will help you better understand when loss of use coverage applies.
What Does Loss of Use Coverage Do?
Again, factors you may have no control over can force you to move suddenly. Renters insurance will typically cover the cost of temporary housing in these situations. It may also help with related living expenses.
For instance, if you need to move out of your apartment, you may wind up with a longer work commute. Loss of use coverage might cover the extra cost of gas during this period. However, renters insurance only helps you in these situations when the specific reason your place is uninhabitable is covered under your policy.
Maybe you live in an area where certain types of extremely harsh weather are common. A basic policy may not cover damage from these conditions. If they damage your apartment so greatly you can no longer live there, loss of use coverage won’t apply. That’s why it’s always important to research what a basic plan covers before signing up. Adding additional coverage may be worth paying a few more dollars a month in the long run.
It’s also smart to consider the various factors that may render your apartment “uninhabitable” in your personal opinion. These aren’t always covered under your plan.
For example, perhaps the landlord wasn’t vigilant about maintaining the building’s heating system. You might be very uncomfortable in your apartment if it breaks down in the middle of winter. Perhaps you’ll be so uncomfortable you feel you have to move out until the furnace is repaired. Although this is an understandable reaction, that doesn’t mean your renters insurance policy will definitely cover the cost of relocating in this type of circumstance.
Damage Isn’t Always Necessary
Loss of use coverage can apply in situations when an apartment isn’t even damaged. For example, local government officials could order citizens to evacuate if a hurricane is on the way. Renters insurance may cover relocation costs in instances when such authorities prevent you from accessing your own apartment.
Keep Coverage Limits in Mind
The purpose of loss of use coverage is to compensate you for all financial losses incurred when an apartment becomes uninhabitable. Thus, it will typically pay for a hotel or temporary apartment. However, it will only pay up to your coverage limits. Keep this in mind when researching policies.
That’s why it’s a smart idea to let your provider help you find new accommodations in these circumstances. You might be tempted to book a room at a luxury hotel if you know your policy will pay for it, but this could cause you to reach your coverage limit too soon. If your provider offers to find a new living space for you, their recommendation will typically be the best option.
Usually, loss of use coverage is equal to 30% of your contents coverage. If your overall contents coverage is worth $30,000, loss of use coverage will compensate you up to $10,000.
It’s also worth noting that providers often allow roommates or co-tenants to split the cost of new accommodations if they have separate renters insurance policies. This may be a topic you want to discuss with your roommate now. Knowing you’re both covered is key to maintaining your peace of mind.
In general, loss of use coverage is extremely valuable. You never know if your place may become suddenly uninhabitable. With a strong renters insurance policy, you’re protected if it ever does.
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