Is loss of use covered by most homeowners insurance policies?

Yes, loss of use coverage is standard in most homeowners insurance policies. It's often referred to as Coverage D. Policyholders should check their policy for coverage limitations and to see how much loss of use coverage they have.

What is loss of use coverage on a renters insurance policy?

Loss of use coverage pays for additional costs a renter incurs if their apartment becomes temporarily uninhabitable. It covers additional costs for: Accommodations Commuting Dining out and laundry

How is loss of use insurance calculated?

Policyholders can be reimbursed for reasonable living expenses when a home is damaged by a covered cause. Homeowners must keep receipts to document the additional costs they incur. This documentation will need to be submitted to an insurance company.

Will my homeowners insurance go up if I file a claim?

Homeowners insurance premiums generally increase after making a claim. This includes loss of use home insurance if policyholders make a claim for additional living expenses when a home is damaged.

Loss of Use Coverage For Homeowners

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Every property owner needs enough homeowners insurance coverage to avoid financial loss. Loss of use coverage is an important type of homeowners insurance that pays for any additional expenses incurred while property is being repaired after a covered loss. Learn more about this type of insurance and why it's necessary in this guide.

What is loss of use on a homeowners insurance policy?

Loss of use coverage is a type of protection included on standard homeowners insurance policies that pays for financial loss if a home is damaged or destroyed by a covered hazard. It can help pay for things like:

Costs of a hotel or temporary rental while the home is repaired
Moving expenses
Storage costs
Food and laundry expenses
Parking and gas costs
Pet boarding

Loss of use coverage will only reimburse you for additional expenses you incur while you're not living in a damaged home. For example, suppose your monthly food and grocery bill is normally $1,000 a month, but you're spending $1,500 because you need to eat at restaurants while you stay in a hotel. With loss of use coverage, you could be reimbursed for the extra $500, but not the full $1,500.

What is additional living expenses (ALE) insurance?

The term "additional living expenses (ALE) insurance" is often used interchangeably with loss of use coverage. So is the phrase "Coverage D."

ALE insurance pays for additional costs incurred because a covered property becomes unusable. For example, if your home burns down, you may need to live in a hotel or apartment and also pay to eat out more frequently. You might also have additional fuel costs if your temporary home is farther from work. Or you might even need to board your pet while you're out of your permanent home. These extra expenses would be covered by ALE insurance.

What does loss of use protection cover?

Loss of use insurance covers many kinds of losses that occur when a property is damaged due to a covered peril, which is an event the policy covers. Here are some of the things loss of use home insurance may pay for.

Additional living expenses

If a property owner incurs expenses due to covered damage, loss of use coverage pays those costs. Most renters insurance policies also include this coverage.

Fair rental value

When a landlord has an insured property that is damaged by a covered cause, loss of use coverage can pay for the rent they miss out on while the home can't be rented.

Prohibited use

If the government prohibits the use of a covered property, loss of use insurance may pay for costs the property owner incurs as a result. For example, if county officials declare roads impassable after a storm and won't let you go to your undamaged home, loss of use insurance could pay for the resulting financial costs while your home is inaccessible.

What is not covered by loss of use insurance?

Here are some of the common things that loss of use insurance doesn't cover.

Living expenses if damage wasn't covered by the policy

In order for loss of use coverage to kick in, the damage must be the result of an event that's covered by the policy. For example, most homeowner policies cover damage from fire or smoke, lightning strikes, wind and hail, or water damage if a pipe suddenly bursts. But standard policies exclude damages caused by flooding or earthquakes.

So if your home floods and becomes uninhabitable due to a storm, your homeowners insurance won't pay for loss of use. If you have separate flood insurance, your insurer may or may not pay for your additional living costs, depending on the policy.

Repairs to a dwelling or personal property

Loss of use coverage doesn't pay to repair or rebuild a home or replace personal property. Other parts of a home insurance policy, such as dwelling and personal property coverage, will pay for these losses.

Pest infestations

If you have a pest infestation, you may need to find alternate accommodations while your home is fumigated. Loss of use coverage usually excludes costs resulting from pest problems.

Unreasonable expenses

Loss of use insurance pays reasonable living expenses. But don't expect your insurance to pay for a five-star hotel, rent on a mansion, or meals out at expensive steakhouses every night.

How much loss of use home insurance do you need?

You may be wondering "How much loss of use coverage do I need?" Here's what you need to know.

Homeowners need enough insurance to ensure additional living expenses can be covered if a home is damaged. Frequently, the amount of coverage is limited to between 20% and 30% of your dwelling coverage limit. A few insurers provide unlimited loss of use coverage. If you would face high costs if displaced from their home, it may be worth looking for one of these insurers.

Is there a deductible for loss of use coverage?

Deductibles are usually waived for loss of use coverage. However, it's important to read individual insurance policy documents, as this can vary by insurer.

How to claim loss of use to your insurance company

Homeowners should refer to their policy documents for specific instructions. Each policy will explain how to make a loss of use claim.

In general, you need to report your covered loss right away. You'll need to track reasonable life expenses and keep receipts to provide documentation when you submit your claim. Usually, policyholders are reimbursed on a monthly basis for the prior month's expenses.

LEARN MORE: Guide to Homeowners Insurance

FAQs

Yes, loss of use coverage is standard in most homeowners insurance policies. It's often referred to as Coverage D. Policyholders should check their policy for coverage limitations and to see how much loss of use coverage they have.
Loss of use coverage pays for additional costs a renter incurs if their apartment becomes temporarily uninhabitable. It covers additional costs for:
- Accommodations
- Commuting
- Dining out and laundry
Policyholders can be reimbursed for reasonable living expenses when a home is damaged by a covered cause. Homeowners must keep receipts to document the additional costs they incur. This documentation will need to be submitted to an insurance company.
Homeowners insurance premiums generally increase after making a claim. This includes loss of use home insurance if policyholders make a claim for additional living expenses when a home is damaged.

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Understanding Loss of Use Home Insurance Coverage