Loss of use coverage helps pay for living expenses, such as lodging and transportation, that come up when your home is temporarily uninhabitable due to a covered event. It is sometimes called additional living expenses (ALE) coverage and may be listed as Coverage D in your home insurance policy documents. Loss of use is a core component of a standard home insurance policy, as well as renters insurance and condo insurance — included at no extra cost.
What does loss of use coverage pay for?
If your home is deemed unsafe or unlivable due to a covered event — called a peril in the industry — you may need to find temporary lodging while your house is being repaired or rebuilt. Loss of use coverage helps pay for certain living expenses while you’re temporarily displaced.
Here’s a look at the broad expense categories that loss of use might help cover:
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Temporary housing, such as a hotel, Airbnb, or apartment
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Parking fees, if you have to pay to park at your temporary lodging
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Meal costs above ordinary grocery expenses
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Pet boarding, if your pets aren’t permitted in the temporary housing
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Laundry, if your temporary housing doesn’t include a washer and dryer
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Mileage or public transportation costs, if your commute to and from work or school is temporarily longer
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Relocation and storage of personal belongings
Loss of use coverage doesn’t take care of all your expenses, however. For instance, if you have a mortgage, you’ll still have to keep up with those monthly payments, even while you’re not living in your home. Insurance will not pay this on your behalf.
Loss of use also excludes lodging and related costs if you voluntarily move out during renovations (but don’t need to) or if your home was damaged and is now uninhabitable because of an incident that is not covered by your policy, such as a flood. (Standard home policies do not cover flood damage; for that, you need to have flood insurance.)
The table below shows typical covered expenses and common exclusions for loss of use coverage.
|
Typically covered by loss of use |
Not covered by loss of use |
|
Temporary lodging following a covered peril |
Temporary lodging when a peril isn’t covered or your home is deemed livable |
|
Meal costs above typical food expenses |
100% of food expenses |
|
Excess transportation costs, such as parking fees or additional mileage |
All fuel costs, regardless of destination and distance |
Your coverage details may vary. Check your policy documents for details or speak with your insurance agent to better understand what is and is not covered.
How loss of use coverage limits work
Loss of use coverage has limits — you can't stay in a hotel indefinitely on your insurer's dime. Your policy will spell out when coverage applies and when it runs out.
Insurers typically handle policy limits in one of two ways:
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A percentage cap: Many policies limit total loss of use coverage to a percentage of your dwelling coverage — the maximum your insurer will pay to rebuild the structure of your home. That percentage is often 10% to 30%. For instance, if you have $500,000 in dwelling coverage and a 20% loss of use cap, you have up to $100,000 to cover additional living expenses while your home is being repaired or rebuilt.
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A dollar cap: Other policies set a fixed dollar limit, like $25,000 or $50,000. When you hit that cap, coverage ends.
The table below shows how the percentage cap might work on a standard home insurance policy:
|
Dwelling coverage |
Percentage cap |
Max amount for loss of use / additional living expenses |
|
$300,000 |
20% |
$60,000 |
|
$300,000 |
30% |
$90,000 |
|
$400,000 |
20% |
$80,000 |
|
$400,000 |
30% |
$120,000 |
|
$500,000 |
20% |
$100,000 |
|
$500,000 |
30% |
$150,000 |
Notably, loss of use coverage may also have a time cap — often 12 to 24 months or until your home is ready to live in again, whichever comes first. Check your policy’s declarations page for specifics.
Does loss of use have a deductible?
There is no separate deductible for loss of use coverage. If your home sustains damage from a covered incident and you are displaced, your standard deductible is subtracted from your damage claim payout. After that, your insurer will reimburse you for both the repair costs and your additional living expenses, up to your policy limits.
What counts as additional living expenses?
Loss of use can help cover additional living expenses that arise when you can't reside in your home due to a covered peril. However, this coverage only pays for the extra costs above what you'd normally spend — not your entire food or transportation bill, just the portion that exceeds your usual expenses.
For instance, let’s say you typically spend $250 a week on groceries. While living out of a hotel, your food costs grow to $450 a week. Loss of use coverage can help pay for the additional $200 in expenses, not the full $450.
Your insurer may refer to this as “actual loss sustained” — the difference between what you're spending now and what you'd normally spend at home.
Lodging is the one exception. Loss of use coverage often pays the full cost of temporary housing, not just the amount above your normal mortgage or rent payment.
How to use loss of use coverage
If you're unable to live in your home following a covered loss, here's how to access your loss of use coverage:
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File a claim with your insurer: Start the claims process with your homeowners insurance company. Include documentation demonstrating why you cannot live in the property until it’s repaired — photos of the damage, a contractor's assessment, or a note from a local authority can all help support your claim.
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Document your normal monthly expenses: Review your bank statements or budget to establish your baseline spending on food, transportation, and other essentials. If your displacement means a longer commute, note the change in distance, as the difference in transportation costs may be reimbursable.
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Keep all receipts: Save every receipt related to your displacement. Photograph or scan them as you go and keep the originals somewhere safe. These are your records if your insurer asks for proof.
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Submit your expenses for reimbursement: Your claims representative can walk you through exactly what to submit, but expect to provide itemized expenses with receipts. The sooner you submit, the sooner you're reimbursed.
Frequently asked questions
What does loss of use coverage cover?
Loss of use coverage helps pay for additional living expenses you incur when you can’t live in your home following a covered loss. This includes temporary lodging, meals, transportation, laundry, and other related expenses that go beyond what you normally spend when living at home.
Is loss of use coverage worth it?
Loss of use coverage can be very beneficial. When you're dealing with a covered loss, any financial relief helps. And with loss of use coverage already built into your policy, that relief comes at no extra cost.
How do I know if I have enough loss of use coverage?
Review your policy to understand how much loss of use coverage you have. Typically, it’s a percentage of your dwelling coverage policy limit. For instance, if you have a 20% cap on a $400,000 dwelling policy, you have $80,000 of coverage. Think through how long that might last you based on hotel and food prices in your area. If it’s not enough, you may want to consider upping your coverage limit. Your insurer can tell you if it’s an option and how much it might increase your policy cost.
Does loss of use coverage apply to renters and condo owners?
Yes, loss of use coverage applies to renters insurance and condo insurance, in addition to homeowners insurance. However, coverage limits are calculated differently. For renters insurance, your loss of use cap is usually a percentage of your personal property coverage limit, or a flat dollar amount. For condo insurance, it's typically calculated as a percentage of your dwelling coverage limit, similar to a standard homeowners policy — though the specifics can vary by insurer.
