Why You May Need Loss-of-Use Coverage on Your Home

When disaster strikes, loss-of-use insurance can help cover the cost of living elsewhere.

Loss-of-use coverage protects homeowners from paying both housing and living expenses after a covered disaster. Dogora Sun/Shutterstock

If your home is partially destroyed by a covered peril, you might need a place to live until repairs are made. The cost of additional lodging adds up quickly. That’s when loss-of-use coverage goes into effect.

Loss-of-use coverage is usually part of a standard homeowner’s insurance policy. However, according to the Insurance Information Institute, state Fair Plans don’t typically provide loss-of-use coverage.

But does that really matter? How important is loss-of-use coverage?

What Is Additional Living Expenses Insurance

According to Travelers, loss-of-use coverage is also known as additional living expenses (ALE). It is coverage D on your homeowner’s insurance policy. This coverage pays for reasonable housing and living expenses if a covered loss occurs to your home.

Some examples of loss-of-use living expenses, according to Progressive, include temporary housing, additional fuel costs, pet boarding, additional food, laundry, parking fees, public transportation fees, and more.

As one example, loss-of-use could cover hotel fees for short-term accommodation or a rental home during longer repairs.

What Triggers Loss-of-Use Coverage

Loss-of-use coverage applies only if a covered peril causes the damage to your home. According to Legal Shield, some scenarios might be:

• house fires
• storm damage
• explosions
• windstorms
• volcanic eruption
• vandalism
• gas leaks that require evacuation

The bottom line is that your home must be unlivable.

But damage not covered by a standard homeowners insurance policy, according to Openly, includes normal wear and tear, pest infestations, flooding, earthquakes, and preventable damage. The insurance company will inspect the damage and determine whether it’s a covered loss and whether you can’t live safely in your home.

Amount Loss-of-Use Coverage Will Pay

According to Progressive, loss-of-use for a home depends on the dwelling coverage. Depending on the policy, the range for coverage is 10 to 20 percent of your dwelling coverage.

For example, if your home is insured for $200,000 in the event of a covered loss, you'd receive up to $20,000 or $40,000, depending on your policy.

Condominium’s Coverage Limit

Condominium policies usually provide loss-of-use coverage equal to or up to 20 percent of the combined limits of dwelling and personal property coverage.

For example, if you have a $60,000 dwelling limit and a $30,000 personal property limit, your loss-of-use coverage would be $18,000, representing 20 percent of the combined limits.

Renters Policy Coverage Limits

Although it depends on your insurance company, loss-of-use coverage is typically a flat amount. This might usually run between $3,000 and $5,000.

Rental Property Loss-of-Use Coverage

If you are a landlord, you may be eligible to be reimbursed for lost income through the loss-of-use coverage if you have it on your policy.

If your tenants are unable to live in the dwelling due to a covered loss, you may be eligible for partial reimbursement. However, lease cancellations aren’t covered.

Deductible on Loss-of-Use

According to Kin Insurance, you don’t typically need to pay a separate deductible for the loss-of-use coverage. But you will still need to cover the deductible if your claim includes damage to your dwelling, other structures, or personal property.

How to File Loss-of-Use Property Claim

It’s important to contact your insurance company immediately to report a claim if your home is uninhabitable, according to the EC Law Council.

Your insurance company will provide you with forms that will require information regarding your claim. It’s important to submit them promptly to avoid delaying your claim.

Documentation to support your claim will also need to be submitted. Keep receipts for all of your additional living expenses—they will be required to validate your claim.

Know Your Policy Limit

As noted, insurance policies have limits on the dollar amount they will pay for each covered loss. They may also have a duration-of-loss restriction. Know your limits to avoid unexpected out-of-pocket expenses.

Verify What Expenses Qualify

Ensure your expenses will be covered. Not all expenses that are not considered “normal” are covered according to Progressive. You should verify with your insurance company in advance what expenses are covered.

If your home is inhabitable due to a covered loss, check with your insurer to ensure there aren’t any reimbursement issues with that hotel.

Remember, you must continue to pay your mortgage out of your own pocket. Loss-of-use won’t cover a mortgage payment even if you’re unable to live in your home.

Is Loss-of-Use Insurance Coverage Worth It?

Loss-of-use insurance is worth it. It comes with most standard insurance policies. If you’re in your state’s Fair Access to Insurance Requirements (FAIR) plan and it isn’t offered, check with your insurance agent to see about buying a separate policy.

Loss-of-use coverage protects you from having to pay double expenses. For example, while you would still have to pay your mortgage during a period when you couldn’t stay in your home, you wouldn’t have to pay potentially thousands of dollars for temporary housing.

The Epoch Times copyright © 2026. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.