Personal Finance

How ‘loss of use coverage’ can help with costs after a natural disaster

Published

6 months ago

October 11, 2024

Mobile homes surrounded by flood water after Hurricane Milton made landfall, in St. Petersburg, Florida, U.S. October 10, 2024.

Octavio Jones | Reuters

If your home is temporarily uninhabitable after a natural disaster, a provision in your homeowners or renters insurance policy may help you with new lodging and other living expenses.

Insured wind and flood damage from Hurricane Helene is estimated to be up to $17.5 billion, according to CoreLogic, a real estate data site. Insured losses from Hurricane Milton could range from $30 billion to $60 billion, per Morningstar DBRS.

Homeowners and renters affected by a natural disaster can ask about so-called “loss of use” or “additional living expenses” coverage from their insurance providers, experts say.

The provision is meant to help cover reasonable living expenses if your home is not suitable to live in as a result of a covered peril such as a hurricane, fire or burst pipe.

“I don’t know of any homeowners policy that doesn’t have it already there,” said Karl Susman, president and principal insurance agent of Susman Insurance Services, Inc. in Los Angeles.

As you file a claim, it will be important to ask your insurance company about the loss of use coverage and how quickly can it kick in, said Shannon Martin, a licensed insurance agent and analyst at Bankrate.com.

“If you call your carrier, they might be able to expedite the loss of use claim filing for you and issue a check early so that you’re not stuck trying to figure out how to pay for separate housing,” she said.

Here’s what the coverage is and what to consider before you use it, according to experts.

How loss of use coverage works

Loss of use coverage is a provision that is typically included in your homeowners insurance policy. It’s usually about 20% of the dwelling coverage and is paid out in the event that the home becomes uninhabitable and a policyholder needs funds for living expenses while the home is repaired or rebuilt, experts say. Eligible expenses might include a hotel or rental home, food, pet boarding or storage fees, among others.

For example, if you’re ensuring a house for $100,000, and that’s what it costs to rebuild the house, that is considered the dwelling coverage, Susman said.

“Then the policy would automatically come with $20,000 in coverage for loss of use,” he said.

“That way you and your family can pay for your hotel and pay for food, because you might be separated from your home for an extended period of time,” Martin said.

Renters insurance typically has a similar provision, as would condominium policies, Susman said.

For renters and condo insurance, the primary coverage is not dwelling because you’re insuring personal property rather than the building, he said. You’ll typically get 20% of the personal property coverage for loss of use, he said.

Ask your insurer about any policy restrictions. There may be expense-specific dollar caps or time limits to claim loss of use coverage.

‘It’s not intended to be a long-term solution’

Loss of use coverage can help homeowners cover living expenses after a natural disaster. However, the money is meant to be a short-term solution, not a long-term fix, experts say.

“It’s generally not intended to be a long-term solution,” said Jeremy Porter, head of climate implications research at First Street Foundation, an organization focused on climate risk financial modeling in New York City. “It’s generally not enough money to carry people through an extended period of time.”

That can be a problem because what it would cost to move out would be very different after a major disaster than during more typical times, Susman said, as there’s often less housing available and hotels may raise their prices amid demand.

While the coverage is meant to be temporary, repairs and broader financial recovery take a long time after major disasters, experts say.

“It takes a long time to recoup and recover,” said Loretta Worters, a spokeswoman for the Insurance Information Institute.

Remember you can make a claim on your policy and get assistance from the Federal Emergency Management Agency at the same time, said Susman.

You might be able to use funds from the government to help you stay in a hotel for a month, then get a place closer to your home and use your loss of use coverage to pay for the difference, Martin said.

Personal Finance

Social Security updates anti-fraud measures for benefit claims

Published

5 hours ago

April 9, 2025

Business Finance News

A sign for the U.S. Social Security Administration is seen outside its headquarters in Woodlawn, Md., on Thursday, March 20, 2025.

Tom Williams | Cq-roll Call, Inc. | Getty Images

New anti-fraud protections are slated to go into effect on Monday at the Social Security Administration.

Ahead of the new policy, an agency spokesperson confirmed on Wednesday that all claim types can still be completed over the telephone, including retirement, survivor and spousal or children’s benefits. Previously, the SSA said those applicants would need to visit an agency office in person for identity proofing.

Individuals making other benefit claims — including for Social Security disability insurance, Medicare and Supplemental Security Income — can also complete their claims entirely over the telephone, which is in line with the agency’s previous guidance, according to the spokesperson.

The Social Security Administration’s update did not mention changes to direct deposit information, which it had previously said would now require in-office visits.

The agency’s new anti-fraud efforts come as new leadership under the Trump administration’s so-called Department of Government Efficiency is broadly seeking to curb waste, fraud and abuse across federal government agencies.

The SSA is implementing the new anti-fraud procedures, including stricter identity verification, as the agency faces website outages and long wait times on its 800 number, potentially forcing more people to visit offices for assistance.

Social Security experts and advocates have raised concerns that the new policies may make accessing benefits more difficult for vulnerable populations, particularly seniors and people with disabilities.

However, the Social Security Administration’s update is a positive development, said Bill Sweeney, senior vice president of government affairs at AARP. He did add that it would be more ideal if the policy and timeline were reconsidered for better outcomes.

“This seems like a pretty good and encouraging signal that they’re listening to folks, that they’re that they’re open to pivoting and reconsidering how to roll these things out and looking at new ideas for how to implement it,” Sweeney said.

Some beneficiaries will still need to visit offices

As the Social Security Administration starts to perform anti-fraud checks over the phone, some claims will be flagged for fraud risks, according to the agency.

Those claimants who are flagged will be required to visit a Social Security Administration office in person for their claim to be processed.

The agency estimates that about 70,000 claimants may be flagged out of 4.5 million telephone claims per year.

Benefit applicants who are not flagged will be able to complete their claims completely over the telephone.

“Telephone remains a viable option to the public,” the Social Security Administration posted on X on Tuesday.

Prior to the Social Security Administration’s update that expands the claim types that can be completed over the phone, the agency had reportedly estimated about 75,000 to 85,000 more people per week may visit its offices in-person.

What you need to know about Social Security

Online applications may be difficult for many seniors and individuals with disabilities, who may lack access to the necessary resources or know how to navigate the processes, according to the Center on Budget and Policy Priorities, a nonpartisan research and policy institute.

More than 10% of seniors in 35 states would need to travel more than 45 miles to get to the closest Social Security office, according to a new analysis from the Center on Budget and Policy Priorities.

About 6 million seniors don’t drive, while almost 8 million older Americans have a medical condition or disability that makes it difficult for them to travel, according to the research from Center on Budget and Policy Priorities.

Many beneficiaries already face obstacles getting through to the Social Security’s phone lines to make an in-person appointment and then need to drive to a field office, said Kathleen Romig, director of Social Security and disability policy at the Center on Budget and Policy Priorities. Generally, individuals need to call for an appointment, though the agency does urge beneficiaries to first try seeking help online.

‘Fear and concern among many older Americans’

Both experts and advocates take issue with the tight timeline under which the policy changes are being implemented.

“If you’re asking seniors and other SSA customers to do something different, you need to provide enough time for them to understand what it is they need to do,” Romig said.

The AARP sent a letter on Monday to Social Security Administration acting commissioner Lee Dudek urging the agency to “halt changes to phone services,” which will “only exacerbate the ongoing customer service crisis,” wrote Nancy LeaMond, chief advocacy and engagement officer.

Instead, the new policy changes should be done more deliberately, with public input, a clear communication strategy and reasonable timeline, the AARP explained in the letter.

The changes set to go into effect on Monday come as Social Security’s website has recently repeatedly crashed, phone service hold times have increased and in some cases disconnected callers, while field offices also have long in-person waits, LeaMond said in the letter.

“This chaotic environment is fueling fear and concern among many older Americans,” LeaMond wrote.

Personal Finance

How to check eligibility to claim the $1,400 IRS stimulus check

Published

6 hours ago

April 9, 2025

Business Finance News

The federal tax deadline is less than one week away — and there’s still time to collect a pandemic-era IRS stimulus check. It’s your final chance to do so.

If you’re unsure if you received the money, there’s a simple way to check via your IRS account online, tax experts say.

The 2021 stimulus payments were worth up to $1,400 per individual, or $2,800 per married couple. A family of four could receive up to $5,600 with two eligible dependents.

Filers who never received the funds could claim the recovery rebate credit on their 2021 federal return. The last chance for that credit is the 2024 tax deadline on April 15, according to the IRS.

You’re eligible for the full recovery rebate credit with up to $75,000 in adjusted gross income as a single filer or $150,000 for married couples filing jointly for 2021.

The phaseout begins with earnings above that and eligibility falls to zero once adjusted gross income reaches $80,000 for single filers or $160,000 for married couples filing together.

The ‘best place to look’ for stimulus checks

The IRS in December unveiled plans to send “special payments” to 1 million taxpayers who didn’t claim the 2021 recovery rebate credit on tax returns for that year.

Most payments should have arrived via direct deposit or mailed paper check by late January 2025, according to the agency.

You can create a login for your IRS online account to check the status of your economic impact payments, including the 2021 stimulus check.

“That’s the best place to look,” said Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida.

After logging into your account, you can find stimulus check information in the “tax records” section under the “records and status” toolbar.

You can also check the “tax records” section to see if you filed a return for 2021. While some taxpayers don’t earn enough to have a filing requirement, you must submit your 2021 return to claim the recovery rebate credit for your stimulus payment, Lucas explained.

Tax season is a prime time for scams: Here’s how to protect yourself

File your 2021 return if ‘there’s any doubt’

In some cases, online accounts show the IRS issued stimulus checks, but filers say they never received the money, said Syracuse University law professor Robert Nassau, director of the school’s low-income tax clinic.

“If there’s any doubt” about your payment, it’s better to file your 2021 return and claim the recovery rebate credit before April 15, he said. Otherwise, you could miss the deadline and lose your chance to collect the money, Nassau added.

Personal Finance

Here’s how to leverage tax-loss harvesting amid tariff volatility

Published

1 day ago

April 8, 2025

Business Finance News

Sean Anthony Eddy | E+ | Getty Images

Amid stock market volatility, many investors are seeking portfolio protection. But they could be missing a prime tax planning opportunity, experts say.

The strategy, known as tax-loss harvesting, is selling losing assets from a brokerage account to offset other investing gains to lower taxes. Losses are typically used to offset gains, such as those from investment sales or capital gains distributions from mutual funds or exchange-traded funds.

Once losses exceed profits, you can subtract up to $3,000 from regular income. After that, you can carry excess losses into future tax years indefinitely.

“It’s looking for a silver lining on a pouring, rainy, cloudy day,” said certified financial planner Sean Lovison, founder of Philadelphia-area Purpose Built Financial Services.

Investors should weigh tax-loss harvesting opportunities anytime there’s stock market volatility, experts say.

“That should be throughout the year,” said Lovison, who is also a certified public accountant.

Tax-loss harvesting could be attractive with the S&P 500 Index still down more than 15% from an all-time high in February as of midday Tuesday. The index briefly entered bear market territory — more than 20% off its record — during Monday’s session amid tariff uncertainty.

Here are some key things to know about tax-loss harvesting, financial advisors say.

You need a ‘very granular’ strategy

While tax-loss harvesting sounds simple, the current market pullback requires a “very granular” approach, according to CFP Judy Brown at SC&H Group in the Washington, D.C., and Baltimore area.

After many years of market growth, investment losses could include more recent purchases, said Brown, who is also a certified public accountant. She has been busy identifying specific “tax lots,” which are transaction records showing an asset’s purchase date and price.

You need systems to “quickly find those lots” to sell for the tax-loss harvesting benefit, Brown said.

Seeking safety amid market volatility: Strategies to keep your money safe

Know the ‘wash sale’ rule

One of the perks of tax-loss harvesting is that you can sell assets for a loss and reinvest a similar investment to maintain exposure, Lovison said.

But you need to know about the “wash sale rule,” which blocks the tax break for buying a “substantially identical” asset within 30 days before or after the sale, according to the IRS.

While individual stocks may be easy, there’s less IRS guidance on how “substantially identical” applies to mutual funds and ETFs, experts say.

For example, you could sell one large cap fund family for another from a different family when the holdings are slightly different, Lovison said.

But if you’re repurchasing the same exact index holding identical funds, “that might not pass the [IRS] sniff test,” he said.