When Does Renters Insurance Cover a Hotel Stay?

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Accidents happen all the time, and they’re extremely unpredictable when caused by a covered peril. Luckily, if an accident is caused by a covered peril like a hurricane or house fire and you have an adequate renters insurance policy, you should be A-OK.

If the rental property you’re living in is struck by a natural disaster, such as a hurricane or tornado, or by a not-so-natural disaster, such as a home fire or burst pipe, that extensive damage could cause damage or destruction to your personal belongings and the rental unit itself.

While every renters insurance policy protects your personal belongings against these unpredictable perils, an adequate renters policy can also protect your financial security if you’re forced to temporarily move out of the unit. Let’s take a look at how renters insurance could help pay for some of life’s expenses.

When Does Renters Insurance Cover a Hotel Stay?

If you’re forced to move out of your rental property unexpectedly due to an unpredictable event, the loss of use coverage under your renters insurance policy can reimburse you for a hotel or rental home of equivalent value.

The first thing you’ll need to do is file a renters insurance claim with your insurer. If your insurer finds that the damage was significant enough to force you out of your rental property while it undergoes repairs or a rebuild and said damage was caused by a covered peril, your loss of use coverage will kick in and reimburse you for a hotel stay or equivalent rental unit.

Many perils aren’t covered, such as earthquake damage or sinkhole damage, but there are a lot of covered perils under your renters policy. These are some of the most common perils covered by renters insurance:

  • Vandalism
  • Rioting or civil disturbances
  • Fire or Smoke
  • Lightning
  • Windstorm or hail, such as a hurricane or tornado
  • Explosions
  • Volcanic Eruptions
  • Damage caused by heating, air conditioning or plumbing
  • Damage due to snow, ice or sleet

Understanding Loss of Use in Renters Insurance

Loss of use coverage in renters insurance goes a step further than simply paying for a temporary home. It can also reimburse you for any additional living expenses you may incur during the duration in which you’re removed from your home.

These expenses can include extra gas money because you’re commuting longer to and from work, pet boarding fees because you can’t bring your furry friend with you to your new place, the cost of a storage unit because you can’t bring all your belongings with you and even food expenses due to perished food items at your old place.

But instead of your renters insurance company cutting you a check for a month’s worth of rent or hotel expenses at your temporary home, loss of use coverage actually reimburses you for the bills. Since they reimburse you instead of providing an upfront lump sum of money, you’ll need to keep all your receipts to prove the payment of any additional living expenses.

However, if you need an advance on your policy’s loss of use coverage to afford an equivalent place, your insurance company may be willing to provide some money upfront after a claim is filed and an adjuster surveys the scene.

You’ll still need to keep and submit all receipts to your insurer, even if they’ve provided you with upfront money. Failure to do so could result in serious consequences.

While some renters insurance policies come standard with loss of use coverage built in for just a few extra bucks a month, you may need to enroll in the converge with many other policies. With renters insurance, loss of use coverage is typically a designated maximum amount per claim.

So let’s say your renters insurance has $10,000 worth of loss of use coverage. If your rental property burns down and needs to be completely rebuilt, you’ll be able to utilize up to $10,000 per claim in hotel stays, rent for an equivalent place, extra gas, food, etc.

If your home takes one year to rebuild, you may want to terminate your lease and find a new place to stay because loss of use coverage also has a time limit attached to it. These limits can be as little as three months to as long as one year. You’ll need to check with your insurer to figure out your time and coverage limits.

Loss of use coverage is in a unique position because it’s typically reimbursed on a first-used basis. So it’ll pay out your policy’s maximum (which could be $10,000) or it’ll pay out for the allotted time specified in your policy (which could be three months) — whichever one comes first.

So let’s assume your policy has a three-month time limit and a $10,000 maximum limit. If your expenses accrue to $5,000 in three months, you’ve maxed out your policy and you won’t get reimbursed for the remaining $5,000 within your policy’s maximum.

Now let’s assume your policy has a one-year time limit and a $10,000 maximum limit. If your expenses reach $10,000 in seven months, you’ve maxed out your policy and you’ll be on the hook for paying for the remaining expenses if your old rental home takes one year to rebuild.

Does Renters Insurance Cover a Hotel Stay During Power Outage?

Unfortunately, renters insurance doesn’t pay for a hotel stay during a power outage unless further damage has occurred to your rental property that makes it uninhabitable. If the power goes out, even for lengths of 10 days or so, it’ll be up to you to stick it out in your home or find another temporary living situation.

Protect Your Belongings With Renters Insurance

Averaging just $12 per month, renters insurance can protect your belongings for the cost of a few cups of coffee.

The editorial content on Clovered’s website is meant to be informational material and should not be considered legal advice.

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