YOU ASK:

Will homeowners insurance pay for rent or hotel after my house burns?

WE ANSWER:

Yes, if your policy has loss of use cover. This is coverage D of the homeowners insurance policy.

When your home is uninhabitable due to the extent of the damage your house underwent or if your house was totally burned down, the insurance company will pay for your alternative residence - a rental house or a hotel. This is during the time that your house is being repaired.

This cover is important because even if you have insurance coverage for your house and can expect a sizable check to help you repair your house, rebuild it, or transfer to another home, there still will be considerable expenses as you adjust to this catastrophic event. Repairs on your house (or, total rebuilding of it) will take months! That means you will have to face additional rental expenses that may make a huge dent on your budget. That is why it is good for you to get this coverage.

In addition, if your homeowners insurance policy includes additional living expenses, which is defined as "any increases (deemed necessary) in the insured's cost of living so that you and your family can maintain its lifestyle or standard of living. This means that the insurance will also pay for additional expenses incurred due to the fact that you are living in a rental house or a hotel rather than your home. Please note that these are only for additional expenses, meaning your existing expenses are not included in the claims payment. Also, any expense that does not continue (such as utilities) will also be deducted from the payment.

For instance, the insurance will pay for certain items such as your food or laundry expenses - since these are additional expenses that you may have due to the fact that you can't cook your food or do your laundry at home. Other additional expenses you may need would be the need to buy new clothes, toiletries and personal items, since your things have been destroyed by the fire.

Please note, however, that there are certain limits to these benefits. The insurance will pay only a specific number of weeks or days.

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