State Farm Insurance License Practice Exam

In the context of a homeowners policy, what does Coverage D - Loss of Use cover?

1. Personal property loss

2. Additional living expenses when the property is uninhabitable

3. Theft and vandalism damages

4. Liability claims

The correct answer is: Additional living expenses when the property is uninhabitable

Coverage D, also known as Loss of Use, is specifically designed to provide financial assistance for additional living expenses incurred when a home becomes uninhabitable due to a covered peril, such as a fire or severe storm damage. This coverage is crucial for policyholders as it allows them to pay for temporary housing, increased living costs, and other necessary expenses that arise while their home is being repaired or rebuilt. In the case of a homeowners policy, Loss of Use is particularly important because it ensures that a family can maintain a standard of living while their primary residence is unavailable. This could include costs associated with living in a hotel or rental unit, as well as increased food expenses. This safety net helps to alleviate the financial burden on homeowners during a challenging time. Understanding Coverage D is essential for homeowners, as it directly impacts their ability to recover from a significant loss without the additional strain of unexpected living expenses.