Can Insurance Cover Temporary Housing After Major Damage?

When major water damage forces you out of your home, your policy may include loss of use coverage. This part of a homeowners policy typically helps pay for a hotel, a rental apartment, or other temporary lodging. It can also cover extra food costs if you cannot cook at home, and storage for belongings left behind.

Loss of use applies only when the damage is from a covered peril, such as a burst pipe or storm-driven rain. If the damage results from neglect or a flood that is not on your policy, you may not have coverage. Read your policy declarations page to see your limit for additional living expenses.

• Hotel or motel stays while your home is repaired
• Rental of a similar home or apartment
• Extra costs for meals if you have no kitchen
• Storage fees for furniture and other possessions
• Laundry and other necessary added expenses

Most policies set a limit for loss of use, often a percentage of your dwelling coverage. For instance, the limit might be 20 percent of that amount. That amount must cover all your temporary living costs until repairs finish.

The actual cost depends on your area's rental rates, how long repairs take, and the size of your family. A larger home or a longer repair period will use up the limit faster. Check your policy for the exact percentage and any time restrictions.

Loss of use coverage does not kick in for every situation. If you choose to leave voluntarily before a professional confirms the home is unsafe, your insurer may question the claim. Also, if the damage comes from a flood and you have no flood policy, you are likely responsible for your own housing.

Mold growth after water damage may not be covered, depending on your policy's exclusions. If you have any doubt, ask your insurance agent to explain your exact coverage. For help assessing the damage, consider a water damage inspection from a local pro to document the extent.