Introduction
If a fire, storm, or other disaster makes your home temporarily unlivable, you may face unexpected expenses—like hotel stays, eating out, or even boarding pets. That’s where loss of use coverage comes into play. This often-overlooked part of your homeowners insurance can be a financial lifesaver. In this article, we’ll explain what loss of use coverage is, what it pays for, and how to use it when you need it most.
If you’re new to homeowners insurance, check out our guide on Homeowners Insurance Explained to understand how your full policy works.
1. What Is Loss of Use Coverage?
Loss of use coverage—also known as Additional Living Expenses (ALE)—is part of most standard homeowners insurance policies. It kicks in when a covered peril forces you to temporarily leave your home because it’s unsafe or uninhabitable.
This coverage helps you maintain your normal standard of living while repairs are made. You’ll be reimbursed for certain expenses that exceed what you normally spend at home.
2. What Does Loss of Use Cover?
Loss of use coverage generally includes:
- Temporary housing: Hotel bills, rent for a temporary apartment, or other shelter costs
- Meals: If you must eat out more often because you can’t cook
- Laundry services
- Storage fees for undamaged belongings
- Pet boarding expenses
- Mileage or transportation costs related to your displacement
- Parking fees if you’re in a city or complex that requires it
📝 Important: It covers only extra expenses—not your entire cost of living. For example, if your normal grocery bill is $300/month and you now spend $600 eating out, only the extra $300 would be eligible.
3. When Is Loss of Use Coverage Applicable?
Loss of use only applies when your home is uninhabitable due to a covered peril listed in your insurance policy.
Covered scenarios may include:
- Fire or smoke damage
- Storm or hail damage
- Burst pipes or major water leaks
- Tree falling on the home
Not covered:
- Flood damage (unless you have flood insurance)
- Voluntary evacuation or renovations
- Damage due to neglect or poor maintenance
If you’re unsure about how claims work, see our guide: How to File a Homeowners Insurance Claim.
4. How Much Coverage Do You Get?
The limit for loss of use is usually set as a percentage of your dwelling coverage. It can range from 20% to 30%, depending on your policy.
Example:
If your dwelling coverage is $300,000 and your ALE limit is 20%, you can receive up to $60,000 in total loss of use benefits.
Some insurers may also limit:
- Daily reimbursement amounts (e.g., $200/day for lodging)
- Maximum duration (e.g., 12–24 months)
Check your policy details or ask your agent for exact limits.
5. How to File a Loss of Use Claim
Filing a claim for loss of use is similar to other homeowners insurance claims—but documentation is key.
✅ Steps:
- Notify your insurer immediately when your home becomes uninhabitable.
- Keep receipts for all eligible expenses—meals, lodging, gas, storage, etc.
- Track the difference between normal expenses and current expenses.
- Provide written documentation showing that the damage was due to a covered peril.
- Cooperate with adjusters, and provide any repair timelines from your contractor.
For government-backed advice on ALE and loss of use coverage, refer to the NAIC guide on Additional Living Expenses.
Conclusion
Loss of use coverage is an essential part of homeowners insurance that many people don’t think about—until they need it. If your home becomes uninhabitable after a covered disaster, this coverage ensures you won’t be left paying out of pocket for hotel stays, meals, and more. Understand your policy limits now, and be ready to act fast if you ever need to file a claim.