Loss of use coverage is a part of home insurance that pays for temporary living costs when a covered disaster makes your home uninhabitable or inaccessible. Most policies include three components. Additional living expenses covers hotels, meals and other daily costs while you're displaced. Fair rental value replaces lost rental income if a tenant also has to vacate during repairs. Prohibited use applies when a civil authority order blocks access to your home, even if the structure wasn't directly damaged. It's listed as Coverage D in most policy documents and is a standard feature of homeowners, renters, condo and mobile home policies.
Homeowners Insurance Loss of Use Coverage: What Is It?
Updated: November 1, 2026
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Key Takeaways
When a covered event makes your home unlivable, loss of use coverage handles the extra cost of living elsewhere, from hotels and meals to pet boarding and transportation.
Because the coverage pays only the portion of your costs that exceeds your normal spending, tracking your usual expenses matters when you file a claim.
Most homeowners policies set the loss of use limit at a percentage of your dwelling coverage, often 20% to 30%, with usage capped from 12 to 24 months.
What is Loss of Use Coverage in Homeowners Insurance?
What Expenses Does Loss of Use Insurance Pay For?
Loss of use coverage pays for living costs that go above what you'd normally spend while you're displaced. Some expenses include:
Additional ExpensesLoss of use pays for extra living costs while crews repair or rebuild your home after a covered loss, such as fire or wind damage. Your policy may cover:
- Hotel or rental accommodation costs
- Additional food expenses, over and above what you would usually spend
- Storage fees for personal belongings
- Laundry expenses
- Extra transportation costs incurred due to the temporary relocation
- Pet boarding fees if your temporary home cannot accommodate pets
- Other living costs that are over and above the average house expenses
For example, if you usually spend $150 per week on groceries but your temporary situation pushes that to $350, your insurer covers the extra $200, not the full grocery bill. That same logic applies to every expense on the list. Only the amount above your normal baseline is reimbursable.
Prohibited UseProhibited use kicks in when a civil authority blocks access to your home after a nearby covered peril, even if your home itself wasn’t damaged. If a wildfire damages homes in your neighborhood and officials order an evacuation, prohibited use pays your additional living expenses, up to a policy limit, while you’re barred from returning home.
Fair Rental ValueIf you rent out part of your property and it becomes uninhabitable, fair rental value reimburses the lost rental income. For instance, if you rent out your home for $1,000 a month and a severe storm makes it unlivable, fair rental value covers that income during the restoration period, up to your policy's specified limit or duration.
Coverage details vary by insurer and policy. Review your policy or talk to your insurance agent to confirm your exact coverage limits and exclusions.
DOES LOSS OF USE COVERAGE APPLY IF I STAY WITH FAMILY OR FRIENDS?
Yes, loss of use coverage can apply if you stay with family or friends, but it usually only reimburses you for actual additional expenses you incur. For example, if you contribute to their utilities, groceries or pay them rent, those costs may be covered with proper documentation. Insurers still won’t pay for lodging if you’re staying for free without incurring extra expenses.
What Does Loss of Use Insurance Not Cover?
Loss of use coverage is anchored to your policy’s list of covered perils, so the cause of your displacement matters as much as the displacement itself. If your home floods and you don’t carry a separate flood insurance policy, your insurer won’t cover your hotel costs because flooding isn’t a covered event under a standard homeowners policy. The same applies if you’re renting elsewhere during a voluntary kitchen remodel. Home improvements aren’t a covered peril, so loss of use doesn’t apply.
- Displacement caused by a peril your policy doesn't cover, like flooding without a separate flood policy
- Temporary rentals during voluntary renovations or home improvement projects
- Ongoing expenses you were already paying before the loss, like your mortgage or rent
- Costs equal to or lower than your normal spending
- Losses covered under other parts of your policy, like personal property damage
If you’re unsure whether a situation qualifies, your insurer’s claims team can confirm before you commit to an expense. Your policy’s covered perils carry the most weight before a disaster, since that’s what puts you in a better position to make quick decisions when something happens.
How Is Loss of Use Coverage Calculated?
Most homeowners policies set your loss of use limit as a percentage of your dwelling coverage, often between 20% and 30%. So if your home carries $300,000 in dwelling coverage and your policy uses a 20% limit, your loss of use coverage comes to $60,000. That figure is usually listed under Coverage D on your declarations page.
For renters and condo owners, the calculation works differently because those policies don’t include a dwelling coverage amount. Loss of use limits in those cases are usually tied to personal property coverage instead. Your declarations page tells you which figure your limit is based on and what dollar amount you’re working with.
Some policies also let you adjust this limit. If you live in a high-cost area where hotels and rentals are expensive, a 20% limit may not stretch far during an extended displacement. Asking your insurer whether the Coverage D limit is adjustable, and what that change would cost, is worth doing before you need to use it.
How Long Does Loss of Use Coverage Last?
Most homeowners policies set a time limit on loss of use coverage alongside the dollar cap, often 12 to 24 months from the date of the covered event. If repairs take longer than that window, you’d cover the remaining temporary housing costs out of pocket, even if you haven’t used your full dollar limit. Your declarations page shows both the dollar cap and the time limit, giving you the complete picture of what your coverage can carry.
When Is a Home Considered Uninhabitable?
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.
Health or Safety ConcernsConditions that pose a direct threat to your health or safety. This can include a missing roof or gas leaks.
Lack of Essential UtilitiesAbsence of utilities like electricity, heat, running water and sanitary facilities.
Structural DamageMajor damage to the structure that makes it unsafe to live in.
How Do You File a Loss of Use Claim?
A loss of use claim follows the same general process as other covered losses, but the steps you take in the first few days directly affect how smoothly and quickly it gets resolved. Most insurers let you start online or through their app, though some still handle initial claims by phone.
- 1File Your Claim as Soon as Possible
The sooner you submit your claim, the sooner your insurer can begin reviewing it. After a widespread event like a hurricane or wildfire, insurers process hundreds or thousands of claims at once, and earlier submissions often move faster through the queue.
- 2Keep Itemized Receipts for Everything
Your insurer will need documentation for every expense you incur while living away from home, including smaller costs like gas, transit fares and laundry. Some insurers offer a partial advance on living expenses right after a major disaster, but full reimbursement depends on having receipts to back up each cost.
- 3Track Your Normal Monthly Expenses
Because loss of use coverage pays only for costs above your usual spending, your insurer may ask for a baseline of what you normally spend on food, transportation and utilities. Having that information ready, ideally from bank statements or a budgeting app, speeds up the review and reduces back-and-forth with your insurer.
- 4Know What Comes Next After You File
Once your claim is submitted, an adjuster will review your documented expenses against your coverage limit and policy terms to determine what's reimbursable. Response times are often longer with large-scale events, so keeping a record of your communications with your insurer helps you stay on top of where things stand.
Homeowners Insurance Loss of Use Coverage: Bottom Line
When a covered disaster forces you out of your home, loss of use coverage keeps the extra bills from landing entirely on you. It covers hotels, meals, pet boarding and other temporary living costs above your normal spending, with limits usually set at 20% to 30% of your dwelling coverage. Knowing both the dollar limit and the time cap before a disaster, and filing quickly with documented receipts if one happens, puts you in the best position to use the coverage smoothly.
Loss of Use Coverage: FAQ
Loss of use coverage activates when a covered peril, such as a fire, windstorm or burst pipe, makes your home uninhabitable or inaccessible. The cause of your displacement has to be covered under your policy for the coverage to apply, even if you genuinely can’t live in your home. Your policy’s covered perils are worth reviewing before a disaster, so you have a clearer sense of when you can count on this coverage.
Loss of use claims usually don't carry a separate deductible. If you're also filing for dwelling damage or personal property loss at the same time, your standard policy deductible may apply to those portions of the claim, but not to the loss of use portion specifically.
Most homeowners policies cap loss of use coverage at 12 to 24 months, starting from the date of the covered event. If repairs extend beyond that window, you'd cover the remaining temporary housing costs out of pocket, regardless of how much of your dollar limit remains. Checking both the dollar cap and the time limit on your declarations page tells you the full scope of your coverage.
In most cases, loss of use payments from your insurer are not considered taxable income. These reimbursements are meant to offset costs you're incurring because of a covered loss, not to generate income. If you have questions about how a specific payment is categorized for tax purposes, a tax professional can give you a clearer answer based on your situation.
Yes. Under the prohibited use component of most policies, loss of use can apply even if your home wasn't directly damaged, as long as a civil authority order blocks you from returning. The underlying cause of that order still needs to be a covered peril for the coverage to activate. If police close your street because of downed power lines after a windstorm, and wind damage is a covered peril in your policy, loss of use coverage can apply.
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About Mark Fitzpatrick
Mark Fitzpatrick is a licensed Property and Casualty (P&C) Insurance Producer and MoneyGeek's resident expert in insurance and economics. In nearly a decade covering the insurance market at LendingTree and MoneyGeek, he's analyzed hundreds of carriers and millions of rates across auto, home, renters, health and life insurance.
His work has appeared in The Washington Post, The New York Times and NPR. He draws on independent cost and consumer experience data, and no insurance company partnerships affect his recommendations.
Mark studied at Boston College and later earned a master's in economics and international relations from Johns Hopkins University. He worked in financial risk management at State Street before joining MoneyGeek. He's also a five-time “Jeopardy!” champion.