Updated: May 12, 2025
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Loss of use coverage has a policy limit, typically set as a percentage of your dwelling coverage — often around 20% — but it can vary by insurer.
It includes two key components: additional living expenses for displaced homeowners and loss of rental income for landlords, helping both manage financial disruptions.
To file a loss of use claim, document all extra living expenses, keep receipts and contact your insurer promptly to understand reimbursement steps.
Loss of use coverage — also known as Coverage D or Additional Living Expenses (ALE) — is part of your homeowners insurance that helps pay for extra costs when your home becomes uninhabitable due to a covered peril, such as a fire or storm. This coverage ensures you can maintain a similar standard of living while your home is being repaired or rebuilt.
Loss of use coverage typically includes two components: additional living expenses and loss of rental income.
Loss of use takes care of additional expenses you incur while your home is being restored or reconstructed following a covered loss. For instance, should a natural disaster like a tornado or hurricane severely damage your home, this coverage reimburses expenses incurred during the period your home is being repaired, like hotel bills and food costs.
Here's a breakdown of the expenses typically covered:
These covered costs are meant to help you maintain your usual standard of living when you're displaced from your home due to covered perils such as fire, windstorms or other insured disasters.
Under loss of use coverage, the loss of rental income aspect in home insurance is a provision that compensates you for the rental income lost when a rented property becomes uninhabitable due to a covered peril such as fire, wind or hail. This coverage mitigates the financial impact of a covered event and ensures a continuous income stream.
For instance, if you rent out your home for $1,000 a month and a severe storm damages it, making it unlivable, your loss of rental income coverage would reimburse you for the lost rental income during the restoration period. This is often up to a specified limit or specified duration.
If your home is deemed uninhabitable, it’s important to know how to claim your loss of use benefits. Fortunately, filing a claim for loss of use benefits is a structured process that helps you get the financial assistance you need:
Notify your insurance company about the damage as soon as possible.
Take photos and videos of the damage to your property and any affected belongings.
Maintain a record of all additional living expenses incurred, like hotel bills and extra food costs.
Complete any claim forms provided by your insurance company detailing the loss and additional expenses incurred.
Allow the insurance adjuster to inspect the damage to ascertain the extent of loss.
Submit your claim and all necessary documentation to your insurance company.
Stay in regular contact with your insurance representative to track the progress of your claim.
Filing a loss of use claim is a meticulous process that demands prompt action and thorough documentation. Understand and follow these steps to position yourself for a smoother claims process, ensuring you receive the necessary support to maintain your standard of living while your home is being restored.
In home insurance, loss of use coverage limits are typically expressed as a percentage of your dwelling coverage limit, ranging between 10% and 30%. Dwelling coverage is the part of your policy that pays to replace your home, so these limits are often $100,000 or more.
To give you an idea of how much your loss of use coverage might be worth: if your dwelling coverage limit is $200,000 and your policy sets the loss of use coverage limit at 20%, you'd be entitled to up to $40,000 for additional living expenses such as hotel stays, restaurant bills and other related costs while your home is being repaired or rebuilt.
A home is categorized as uninhabitable when it becomes unfit for living. While the specifics of what constitutes an uninhabitable home may vary depending on the insurance company and policy, insurers typically look at the following before deeming it uninhabitable:
Conditions that pose a direct threat to your health or safety. This can include a missing roof or gas leaks.
Absence of utilities like electricity, heat, running water and sanitary facilities.
Significant damage to the structure that makes it unsafe to live in.
If your home is deemed uninhabitable because of damages caused by one of the covered perils below, you'll be able to utilize your loss of use coverage.
Covered perils under loss of use claims typically include events like fire, windstorms, vandalism and lightning strikes that cause significant damage, rendering your home uninhabitable. Below is a snapshot of some common covered perils under home insurance:
Understanding the typical covered perils under loss of use claims is important so you can utilize this coverage effectively. Review your policy or consult with your insurance representative to ensure you have the necessary protection in place.
Understanding loss of use coverage — also known as Coverage D — is essential when protecting your home. This coverage pays for temporary living expenses and lost rental income if your home becomes uninhabitable due to a covered peril. To ensure you’re fully protected, review your policy limits and speak with your provider about what expenses are covered.
Loss of use coverage can be confusing, especially when you’re dealing with a temporary displacement. Our answers to common questions break down what it covers and how it works.
Loss of use coverage typically includes hotel stays, meals, laundry and transportation costs incurred while your home is being repaired after a covered event.
Coverage lasts until your home is repaired or rebuilt, or you reach your policy’s time or dollar limit — whichever comes first. Most policies set this limit as a percentage of dwelling coverage.
Yes, in many cases you can still claim reasonable expenses, such as meals or commuting costs, even if you’re not staying in a hotel. Be sure to save all receipts.
Yes, most standard policies include loss of use coverage as part of Coverage D, but limits and covered expenses can vary by insurer.
No, loss of use only applies when your home is uninhabitable due to a covered peril like fire or storm damage — not for planned upgrades or renovations.
MoneyGeek analyzed quotes from multiple insurance providers across the U.S. using a profile that reflects the average homeowner. By considering different locations and companies, we aim to give a reliable estimate of what homeowners can expect to pay — showing why it’s important to compare rates.
Homeowner Profile
For our analysis, we created a sample homeowner profile with the following characteristics:
Homeowners Insurance Coverage Details
Unless otherwise specified, we used the following coverage limits to collect quotes for our comparison:
We also compiled data for policies with broader coverage to determine the best companies for insuring expensive homes, upping limits to $1 million in dwelling coverage, $500,000 in personal property coverage and $1 million in liability coverage.
About Mark Fitzpatrick
Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. With over five years of experience analyzing the insurance market, he conducts original research and creates tailored content for all types of buyers. His insights have been featured in publications like CNBC, NBC News and Mashable.
Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!
Passionate about economics and insurance, he aims to promote transparency in financial topics and empower others to make confident money decisions.
