What is 'loss of use' coverage in home insurance?
03 Feb 2025

Financial devastation often follows in the wake of a disaster that renders your home uninhabitable.

That's where Loss of Use coverage in your home insurance policy becomes your financial lifeline.

It covers additional living expenses incurred when you're temporarily displaced from your home due to insured damages.

This article aims to decode this coverage for homeowners in India, empowering them to fully leverage its benefits during challenging times.

What does loss of use cover?
Coverage scope

Loss of Use coverage assists with expenses such as temporary housing and additional meal costs when your home becomes uninhabitable due to insured damages.

For instance, if a fire renders your house uninhabitable and you need to reside in a hotel, this coverage would help with the hotel and extra food costs.

Remember, policies do have a coverage limit.

How to claim loss of use benefits
Claim process

To access these benefits, you need to first inform your insurance company about the damage immediately.

Documentation is crucial; maintain all receipts associated with additional living expenses.

The insurer will evaluate the damage and establish whether your circumstances qualify for Loss of Use coverage.

Knowing this process is important so that you're ready if you ever need to make a claim.

Limitations and exclusions
Know your policy

Every insurance policy comes with its fine print, and it's important for policyholders to understand what isn't covered under their Loss of Use coverage.

Typical exclusions include damages resulting from neglect or lack of maintenance.

Plus, there's a limit to how much insurers will pay out for this coverage, often capped at a percentage of the dwelling coverage amount or a specific time period.

Maximizing your coverage benefits
Utilization tips

To make the most of Loss of Use coverage, thoroughly review your policy to comprehend the scope, limits, and duration of coverage.

Negotiate with your insurer for potential upgrades or modifications to improve coverage without substantially increasing premiums.

A proactive approach to understanding and managing your insurance can significantly reduce financial stress during unforeseen home displacement.