This Article Appears in our November 2002 Newsletter
Improve Your ‘IQ’ – Your Insurance Quotient Insurance
Tips for
Property Owners and Property Managers
by William G. Jeffray,
Executive Vice President
Renfrew
Thompson Insurance Ltd.
In our ongoing series of articles focusing on "tenant insurance", this article will look at "Loss of Use".
Loss of Use is an extension of the “Basic Contents Policy” and is made up of:
1) additional living expenses, and
2) prohibited access by Civil Authority.
Generally the amount of insurance available is 20% of the household contents policy amount. For instance, if you purchase a tenant insurance policy for $30,000 you would automatically receive an additional 20% (i.e. $6,000.) for "loss of use".
While there is some variation in language from insurance company to insurance company the coverage would read something like the following:
- Additional Living Expenses “If, as a result of damage by an Insured
Peril, your dwelling is unfit for occupancy or you have to move out
while repairs of insured damage are being made, we insure any necessary
increase in living expenses, including moving expenses, incurred by you
so that your household can maintain its normal standard of living.
Payment shall be for the reasonable time required to repair or rebuild
you dwelling or, if you permanently relocate, the reasonable time
required for your household to settle elsewhere.”
- Prohibited Access by Civil Authority If a civil authority prohibits access to your dwelling as a direct result of damage to neighbouring premises by an Insured Peril under this policy we insure any resulting Additional Living Expense for a period not exceeding four weeks.
In the case of the Erlton fire and the Century Gardens electrical fire, many tenants could not use their suites due to fire damage, but many others were also refused access due to Orders issued by Police and Fire department personnel. Tenants who had purchased tenant insurance were able to seek other accommodations until their suite was again available for occupancy.
Once the suite is ready for occupancy the landlord's policy covering "loss of rental income", stops.
This impacts the landlord significantly. If a tenant is able to have his living expenses paid by the Insurance company during the restoration period of his suite, the landlord has a tenant waiting to move back in. Where the tenant has no such insurance he must immediately find other rental accommodation and probably will not be coming back when the suite is finally restored.
In conclusion, a tenant who has insurance puts the landlord at a greater advantage when restoration is complete and suites are once again available for occupancy.
