Loss of use coverage, also called Coverage D or Additional Living Expenses (ALE), is part of standard home insurance. It covers extra costs when a covered peril makes your home unlivable. For example, if lightning causes a fire and your home is deemed uninhabitable, it can pay for hotel stays, increased food costs and pet boarding.
Homeowners Insurance Loss of Use Coverage: What Is It?
Updated: October 11, 2025
Advertising & Editorial Disclosure
Key Takeaways
Loss of use in homeowners insurance pays for related living costs if you are displaced from your home due to a covered peril, such as a fire, strong winds, lightning and more.
Loss of use coverage limits are set as a percentage of your dwelling coverage, often around 20%, but it can vary by insurer.
There are three components in loss of use coverage: additional living expenses for displaced homeowners, loss of rental income for landlords and prohibited use if your home is inaccessible.
What is Loss of Use Coverage in Homeowners Insurance?
What Does Loss of Use Cover?
There are three components to loss of use coverage:
- 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
Additional Expenses
Loss of use takes care of additional expenses you incur while your home is being restored or reconstructed following a covered loss, such as fire, windstorms or other insured disasters. Here are the expenses your policy may cover:
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.
These expenses must be reasonable and necessary to maintain your standard of living, and insurers may require receipts and documentation.
Prohibited Use
Prohibited use applies when you’re forced to leave your home even though it isn’t damaged, because a civil authority prohibits access after a covered peril occurs nearby. For example, if a wildfire damages homes in your neighborhood and officials order an evacuation, prohibited use pays for additional living expenses, up to a limit, while you’re barred from returning home.
Fair Rental Value
If you rent a portion of your property and it becomes uninhabitable, fair rental value compensates you for the income lost. It mitigates financial impact and ensures you have a continuous income stream. For instance, if you rent out your home for $1,000 a month and a severe storm makes it unlivable, fair rental value reimburses you during the restoration period. This is up to a specified limit or specified duration, depending on your insurer.
Coverage details may vary by insurer and policy. Review your specific policy or speak with your insurance agent to understand 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. However, insurers won’t pay for lodging if you’re staying for free without incurring extra expenses.
What Doesn’t Loss of Use Cover?
Loss of use coverage covers temporary living expenses and income loss when relocation results from a covered peril. Fires, lightning strikes and strong winds qualify, but floods, earthquakes and sewer backups require separate coverage.
Excluded costs include elective renovations, luxury accommodations beyond your normal living standard and routine expenses you'd pay regardless of location.
WHAT PERILS ARE COVERED BY LOSS OF USE COVERAGE?
Loss of use coverage applies only when the damage is caused by a peril your policy covers. Common covered perils include:
- Fire or smoke
- Lightning strikes
- Windstorms or hail
- Explosions
- Theft or vandalism
When Is a Home Considered Uninhabitable?
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 often look at the following before deeming it uninhabitable:
Health or Safety Concerns
Conditions that pose a direct threat to your health or safety. This can include a missing roof or gas leaks.
Lack of Essential Utilities
Absence of utilities like electricity, heat, running water and sanitary facilities.
Structural Damage
Major 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.
How Much Loss of Use Coverage Do I Need?
Loss of use coverage limits are often set to a percentage of your dwelling coverage, between 10% and 30%, but this varies from insurer to insurer. Dwelling coverage is a part of your policy that pays to replace your home, which may range from $100,000 to $1 million, so loss of use coverage may sit between $10,000 to $300,000.
When deciding how much you need, consider the cost of temporary housing in your area, potential increases in food and transportation expenses and how long repairs might take after a major loss. Aim for a limit that would realistically cover your living costs for a few months if your home became uninhabitable.
Coverage requirements and available limits may vary by state. Some states have specific regulations governing loss of use coverage minimums or maximums.
How to Claim Loss of Use Benefits
If your home is deemed uninhabitable, loss of use claims follow these steps:
- 1Contact Your Provider
Notify your insurance company about the damage as soon as possible.
- 2Document Damage
Take photos and videos of the damage to your property and any affected belongings.
- 3Keep Receipts
Maintain a record of all additional living expenses incurred, like hotel bills and extra food costs.
- 4Fill Out Claim Forms
Complete any claim forms provided by your insurance company detailing the loss and additional expenses incurred.
- 5Initiate an Adjuster Inspection
Allow the insurance adjuster to inspect the damage to ascertain the extent of loss.
- 6Submit Claims
Submit your claim and all necessary documentation to your insurance company.
- 7Follow Up
Stay in regular contact with your insurance representative to track the progress of your claim.
Loss of use claims require your prompt action and complete documentation. Follow these steps to file your claim and maintain your standard of living during home repairs.
Homeowners Insurance Loss of Use Coverage: Bottom Line
Loss of use coverage (Coverage D) pays for temporary living expenses and lost rental income when your home becomes uninhabitable due to a covered peril. Review your policy limits and speak with your insurer to understand what expenses are covered.
Loss of Use Coverage: FAQ
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.
What does loss of use coverage include?
Covered expenses in loss of use coverage include hotel stays, meals, laundry and transportation costs incurred while your home is being repaired after a covered event.
How long does loss of use coverage last?
Loss of use coverage lasts until your home is repaired or rebuilt, or you reach your policy's time or dollar limit, whichever comes first. Policies set this limit as a percentage of your dwelling coverage.
Does loss of use apply if I choose to stay with friends or family?
If you stay with friends or family under loss of use coverage, you can still claim reasonable expenses such as meals or commuting costs rather than hotel stays. Save all receipts for reimbursement.
Is loss of use coverage included in all homeowners insurance policies?
Standard homeowners policies include loss of use coverage as Coverage D, but your policy's limits and covered expenses vary by insurer.
Does loss of use coverage apply during voluntary home renovations?
Loss of use coverage only applies when your home becomes uninhabitable due to a covered peril like fire or storm damage, not for voluntary, planned upgrades or renovations.
Additional Living Expenses Homeowners Insurance: Related Articles
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.