Homeowner's Insurance Question - Loss of Use

[sweetiemom]

My current insurance company has mailed me my renewal, due to renew mid-July. They have issued a new policy and changed the Loss of Use term so that I no longer have "Actual Loss Sustained" coverage, but rather now am only covered for 30% of my dwelling coverage. I spoke with my agent and he informed me this is a company-wide change. I have had this policy, along with auto coverage from the same company, for 4 years now, and otherwise am happy with the company. I'm claim free so I cannot speak to that aspect, but my rates have been stable and the agent I have is responsive and easy to deal with.

I looked at some several online quotes, just to see whether I can get another policy for a reasonable rate that will give me the Actual Loss Sustained for Loss of Use. I only found one company that seems to still offer this coverage (although I did not call the several companies that don't provide online quotes). The quote from this company was otherwise also very good in that the rates were lower and the dwelling coverage offered was a bit higher than my current coverage. However, I am hesitant to change for two reasons. First, I had a policy with this company about 6 or 7 years ago, for five years, and they seem to offer very low rates to start out and then raise them after the first year or two. My experience was they raised my rates every year 15% or more. Second, it seems like this percentage based coverage for loss of use is the trend for companies and I'm concerned if I change to a company that may not keep my rates stable primarily for this issue, they may end up changing the coverage anyway.

I apologize for how long winded this is. My main question is the following - does it seem like it makes more sense just to stay where I am? In other words, am I correct in suspecting that there is a strong likelihood that the new company probably isn't far behind in changing to the percentage coverage for loss of use too? I understand no one can say for sure but I'm hoping that those of you working in the insurance industry may have a feel for this. BTW, I have avoided naming companies because I wasn't sure if I was allowed but I'd be happy to if asked. Thank you very much for your help.

 

[adjusterjack]

I have never seen a homeowners policy that didn't list dollar amounts for coverage A (Dwelling), B (Other Structures), C (Personal Property), D (Loss of Use - formerly known as Additional Living Expenses).

Traditionally, Coverage D was 20% of Coverage A. My policy is also 30% of Coverage A. You still are covered for your actual loss sustained up to the limit.

I suggest you look at the declaration page of your previous policies and look for the Coverage A, B, C, and D numbers.

I think you may find that you have always had a dollar amount shown for Coverage D which was a percentage of Coverage A.

At any rate, it's a non-issue. My policy has $208,000 on the dwelling and $62,400 on Loss of Use. At even $3000 per month I'm looking at 20 months, certainly long enough to rebuild or buy another house without using it all up.

As for changing companies, as long as you are satisfied with the rates and service, it's better to stay put.

 

[sweetiemom]

Thank you.

 

[InsCommentary]

A lot of insurers used to have "guaranteed replacement cost" on the dwelling. Not so much now and for those that provide excess coverage, it's usually capped. There used to be some insurers that had no loss of use limit other than perhaps a time limit for rebuilding or relocating. The reality is that 30% of your dwelling limit is probably fine unless you're part of a catastrophic loss (fire conflagration, hurricane, etc.) that significantly drives up costs.

 

[sweetiemom]

Yes, and there has always been a 24 month limit on loss of use. Thank you for your reply.