What Is Coverage D on Home Insurance?

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You'll need Coverage D for temporary housing expenses. Photo by @webephotographyar via Twenty20
Usually when damage is done to your home, you’re able to easily live around the issue until you are able to either fix the issue, or bring in an outside contractor. But occasionally, there may be damage done to your home that are so serious or extensive that it would not be safe for you or your family to stay in the house until those damages are resolved. But living away from home can be expensive. That’s where Coverage D comes in.
Coverage D on a homeowner’s insurance policy is also known as additional living expenses (ALE) protection. Following a qualifying disastrous event, you might have to leave your home while it is made livable property again. If that were to happen, Coverage D alleviates the financial burden of living off premises.

What Does Coverage D Cover on a Home Insurance Policy?

In the event of sudden disaster resulting in property damage or loss that makes the dwelling uninhabitable, Coverage D on a homeowner’s policy helps to offset the cost of living away from home. This is why Coverage D is also known as loss of use insurance or use coverage; it serves to help when a homeowner loses the use of the home. Some of the things this part of a homeowner’s policy pays for are:
  • Hotel or other rental property
  • Groceries
  • Eating out or takeout (after all, a kitchen may not be available to you during your temporary emergency housing)
  • Fuel costs due to increased commuting
  • Laundromat or cleaners
  • Pet boarding
Essentially, Coverage D can reimburse homeowners displaced from home for the expenses that would not have been incurred had they been able to stay rather than leave.

When Does a Homeowner Qualify for Coverage D?

Not every possible disaster that might make your house uninhabitable for a period of time will qualify you for additional living expenses. An event that will trigger this coverage is known as a “qualifying event” and only when a qualifying event renders a dwelling uninhabitable will Coverage D kick in. Qualifying events vary according to the type of homeowner’s insurance policy you have, but the average basic policy covers 12 situations:
  • Aircraft crashes
  • Civil commotions, or riots
  • Explosions
  • Fallen objects
  • Fire or lightening
  • Hail or wind damage
  • Motor vehicle crashes
  • Smoke damage
  • Theft
  • Vandalism
  • Volcanic eruptions
  • Weight of ice or snow
A broad homeowner’s policy has a little more extensive Coverage D. It covers everything that the basic Coverage D on a homeowner’s policy does along with 4 other situations:
  • Accidental steam or water overflow
  • Freezing
  • Sudden bulging, burning, or busting of household systems
  • Sudden damages from artificially generated electrical currents

When Does a Homeowner Not Qualify for Coverage D?

While it is possible to add riders to your Coverage D insurance to increase protections against disaster, there are also some situations that are unlikely to be covered under any homeowner’s policy. These include but are not limited to:
  • Earthquakes, landslides, or sinkholes
  • Flood or water damage
  • Ice and water pressure
  • Intentional loss
  • Neglect in upkeep, or wear and tear
  • Nuclear damage
  • Pest-related damage
  • Settling of the house
  • War damage
Additional flood or earthquake insurance to cover additional living expenses may be available to add to your homeowner’s policy outside of Coverage D, but you are likely out of luck for insurance help in the other situations. Be sure to check your policy or talk to your agent when purchasing home insurance to make sure you fully understand what your qualifying events will be.

What Else Should You Know About Coverage D on a Homeowner’s Policy

There is an overall limit to the amount that can be paid on a claim for personal property loss under Coverage D on a homeowner’s policy. This is usually around 20% of your home’s declared value on the policy. So, if your house is valued at $500,000, then the overall Coverage D limit is $100,000. That is the maximum amount a homeowner can receive on a claim for additional living expenses in this case.
There is no deductible associated with Coverage D on a homeowner’s policy. So, this portion of your home insurance works differently than dwelling coverage or personal property coverage. The expenses you claim under Coverage D, however, will be assessed if they are reasonable. So, you may not want to book a hotel at the Ritz-Carlton while your home is being repaired unless you are prepared to pay for it out of pocket. If you are in doubt of what expenses are considered reasonable, reach out to your insurance agent for clarity.