Wow, this time of year can be so busy. The season starts changing on us rapidly, the cold starts rushing in; if you live up here in Washington State then that means the rain starts coming too! Leaves start changing, the holiday hustle seems to come out of no where, plans start being made for trick or treating, Thanksgiving, and Christmas. I don’t know about you but the 4th quarter seems to sneak up on me more and more as the years go by!
This time of year for those of us in the insurance industry is generally our most active in regards to claims. As the weather gets cooler, wetter, and the amount of daylight decreases it only seems fitting we would discuss the coverage that is generally extremely important during this time of year. That coverage is non other than loss of use. This coverage is usually the portion that I typically see on a competitors home owners policy that is too low. So what is this coverage?
Loss of use is essentially coverage for you and your loved ones that helps make the transition of a claim easier, this coverage is what steps in when that pipe breaks in your kitchen and all of your cabinets and flooring has to be removed, a tree from your neighbor’s house snaps and comes crashing through your roof or whatever covered loss decides to come knocking on your door making a portion or all of your home unable to be used.
Loss of use steps in after the claim has been filed to help offset the increased cost due to the covered loss occurring. For example, if you were unable to stay in your home this coverage would set up a temporary living arrangement (such as a hotel) for you and your family to stay at while the insurance company processes your claim and begins to put your house back in order. This coverage can also help offset your increased food bill; if you have ever tried living in a hotel you will notice that the little refrigerator they give you doesn’t really hold much and you will either be shopping more often or eat out more frequently than you may be accustomed too, oh yeah and did I mention you still have to pay your mortgage, utility bills, etc. Have you ever noticed that those unexpected bills, or the need to spend more than you had planned never seems to come at a convenient time? Well, if you have a covered loss, and your insurance agent designed a policy just right for your family, this is not a worry you need to carry with you!
But Graham, how do I know if I have enough loss of use coverage? Well, I thought you would never ask!
A good rule of thumb would be to take your monthly rent or mortgage payment and multiply it by 12, if you have close to this amount or more than this chances are you are pretty well covered. If not, it’s time to make that call and find out how to fix it before you have a claim. So why should I multiply it by 12? Chances are you could be out of your home for 12 months depending on the severity of the loss, and what I have found by experience is that this number is very close to what you may end up spending per month in additional expenses. This formula isn’t perfect and shouldn’t be used as your only way of determining what amount is right for you, but it is a good starting point.
That’s it for this week, thank you for reading! Have a suggestion for a future topic? Please comment and let us know your thoughts and or suggestions.
Hunt Family Insurance Agency – 888-568-HUNT (4868)