Which coverage in a homeowners policy provides for indirect or consequential losses?

In a homeowners policy, Coverage D is specifically designed to address indirect or consequential losses. This coverage is often referred to as "Loss of Use" and applies when a covered loss makes the home uninhabitable, forcing the homeowners to temporarily relocate. Coverage D will provide financial assistance for additional living expenses during this period, such as hotel costs, increased food expenses, and other costs incurred due to being displaced from the home.

Direct losses cover physical damage to the home and personal property, but they do not account for the expenses that arise from the inability to use the property. This is where Coverage D is essential, as it directly addresses the financial impact of losing the ability to occupy or use the home due to a covered peril.

Understanding the role of Coverage D helps homeowners recognize the importance of having this protection in their policy, ensuring they are not financially burdened in the event of an unfortunate incident.