Does Renters Insurance Cover Displacement?

Sudden fire, burst pipes, or a natural disaster can turn your rented home upside down. But beyond the immediate damage, what happens when you can’t live there anymore? The question on every renter’s mind in such a crisis is: Does renters insurance truly cover displacement?

Well, in most cases, renter insurance NYC does provide a lifeline! It covers hotel stays and rentals for temporary displacements. Until your primary home is repaired, but keep in mind that exclusion exists!

What is “Loss of Use” Coverage and Common Inclusions

“Loss of Use” coverage is mainly provided to help you cover additional living expenses when your home becomes inhabitable. Commonly covered peril that can trigger ALE (Additional Living Expenses) include:

Fire:

Your apartment catches fire, damaging the whole property. In that case, the insurance carrier will pay for personal property damage. Also, you will get ALE to manage hotel expenses.

In addition to that, a fire in a neighboring unit or common area causing smoke that forces you to vacate the apartment will also be covered. 

Water Damage (Sudden & Accidental):

Say a frozen pipe burst in your unit or unit upstairs, causing flooding in your apartment.

Also, water leaks from broken appliances like dishwashers and washing machines and covered plumbing issues can also cause floods. Making your living space unlivable. Furthermore, damage from overflowing tubs or sink and sewage backups (in some policies only).

Windstorm/Hail Damage:

A severe storm damages your roof, window or exterior, making your apartment exposed. Moreover, falling trees on your building can also make your unit uninhabitable. Usually covered in most renter insurance policies. 

Theft-Related Damage:

A break-in causes significant damage to your property, such as broken doors and smashed windows. If the damage can’t be fixed the same day, the renter insurance policy will provide ALE.

Government-Mandated Evacuation:

When a civil authority (like the police or fire department) orders an evacuation of your area due to a covered peril, it can be due to a nearby wildfire or hazardous material spill. So, even if your specific unit isn’t directly damaged, access is prohibited. So, the insurance carrier will cover the ALE. 

That’s not the end! Insurance companies provide ALE for explosions and falling objects (aircraft, satellite dish or part of another building). 

Quick Note: It only covers expenses above your normal spending. For instance, your hotel bill is $1,500, and your normal expense is $1,000. The insurance company will reimburse you $500 only. 

What Temporary Living Expenses Are Covered?

Temporary living expenses are provided to eliminate the stress of hotel bills and take outs. It typically covers:

• Accommodation
• Increased daily costs
• Essential Services

Accommodation:

Costs for hotels, motels, or short-term rentals (like Airbnb or vacation rentals). Be sure to choose accommodation comparable to your daily living situation. The insurance company won’t pay for a luxury hotel if it doesn’t match your previous living situation. Also, there is a cap on how much ALE you get. So, be sure to use it carefully. 

Increased Daily Costs:

Living out of home increases your food, laundry and transportation costs. The insurance provider usually covers it.

• Food: Extra expenses for meals if you can’t cook at home, including dining out and takeout).
• Laundry: If you lose access to your in-unit or building facilities. However, if you were using coin-based machines and paid services before, insurance providers won’t pay for it.
• Transportation: Any significant increase in commuting costs or temporary parking fees. Same as laundry, if you were using paid parking before, the insurance carrier will not reimburse you for it. 

Essential Services:

Additional living expenses comprehensively cover you. It will not only reimburse for your hotel charges but also for other essential services. It includes:

• Temporary storage unit fees
• Per boarding fees
• Refrigerator food spoilage reimbursement

Food spoilage is a common concern, and it can be claimed if the damage is due to covered peril. Also note that there is a cap on food spoilage limit, ideally $500. 

When is Displacement Not Covered? (Key Exclusions & Limitations)

Time to know when the renter insurance policy leaves you alone with bills! Tenant insurance policies are typically named peril policies. That means it won’t cover every single disaster. Although it covers most commonly covered accidents, considering it a full-fledged solution isn’t recommended. Here are some situations when you can’t expect displacement coverage:

Uncovered Perils:

Standard renters insurance policies do not typically cover damage from natural disasters. For instance, damages from floods, earthquakes, or sinkholes require specific insurance policies. These usually require separate, specialized policies like, you can purchase flood insurance online. 

Widespread power outages not caused by a covered peril are also often excluded.

Not “Uninhabitable”:

The damage must cause serious damage to your property and truly make it unlivable or inaccessible. Minor damages causing inconvenience for a short period of time usually don’t qualify for ALE.

Negligence/Wear & Tear:

Damages resulting from poor maintenance, intentional acts and negligence are generally not covered. Say a long-term mold due to lack of maintenance is often excluded. 

Policy Limits & Duration:

All policies have maximum dollar limits and time constraints. Companies offer ALE for 12 to 24 months. More than that will not be entertained. It is recommended to read the fine print of your policy to get a better understanding of your policy.

Short-Term Disruptions:

Some policies may not entertain ALE for a shorter period of time (15-30 days). Although it totally depends on your insurance provider. 

Landlord’s Role & Responsibility in Displacement:

For some accidents, your landlord’s insurance policy and your tenant coverage will kick in together. It is important to understand whose policy covers what!

Tenant’s Policy Pays:

If the place becomes uninhabitable, your renter insurance covers your displacement costs. On the other hand, the landlord’s insurance covers their property and loss of rental income. In any case, your temporary living expenses won’t be the landlord’s responsibility. 

Reduced Landlord Liability:

When tenants have ALE coverage, it drastically reduces the stress on landlords’ heads, too. In case of accidents, there is very little likelihood of tenants seeking compensation from landlords.

Landlord Negligence:

If a landlord is legally found responsible for damage caused to the property, making it inhabitable, tenants can seek temporary housing costs from them. 

Essential Steps to File Claim for Reimbursement

Once the disaster strikes, there is no way but to file a claim. Here are a few steps you can take to smoothly handle the claim process.

Document Everything:

The first report you send to your insurance carrier is a record of all expenses that happened due to displacement. So, keep a nice and clean record of all original receipts for every additional expense. It can be: 

• Hotel bills
• Restaurant receipts
• Laundry services
• Storage fees
• Gas
• Pet boarding fee

In short, if it’s necessary and above your normal expenses, you must document it.

Contact Your Insurer Promptly:

Notify your insurance provider as soon as displacement occurs. They will guide you on their specific claim process and documentation requirements. Further, ask them about specific limits if this isn’t clear. Communicate your specific case to understand if displacement is covered or not. 

Understanding Reimbursement:

Reimbursement happens when you provide a record of expenses. Initially, you have to cover this expense out of pocket. 

Conclusion:

Hotel stays are typically covered if it’s due to a named peril. However, leaning all on it is not recommended. Also, when you need hotel stays, try to keep everything as per your normal living situation. Furthermore, understanding your individual policy limit is also crucial. Each insurance carrier has its own policy terms. So, make sure you read all the documents carefully. 

Moreover, if you haven’t bought your insurance policy or are looking to change providers Apple Insurance brokers are here to help. We compare more than 100 insurance carriers on your behalf and provide you with suitable quotes only.