What Does "Loss of Use" Insurance Actually Cover?

Family Arriving In Hotel Room

Your homeowners policy covers “additional living expenses" (“loss of use” or “Part D” coverage) in addition to typical disasters. This means that if your home is damaged by a fire, wind storm or [insert other disaster], you can get more coverage to pay for living expenses during the repair period.

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"Loss of Use" Coverage Pays for Living Expenses Required During the Rebuilding Period

Additional living expenses coverage pays any increase in living expenses while your home is repaired. Examples of expenses typically covered include: 

  • Hotel costs
  • Food costs in excess of normal grocery/restaurant bills
  • Cooking supplies 
  • The cost of moving property into storage

Payment for these expenses typically doesn't stop if the policy expires. The insurance company will keep paying until one of three things occurs:

  • The limit is used up
  • The home is repaired to a habitable state
  • You permanently relocate

"Loss of Use" Coverage Won't Pay 100% of Additional Living Expenses

In most cases, home insurance companies place a limit or cap on "loss of use" payments. For example, many homeowners policies will only offer "loss of use" coverage as a percentage of the limit of insurance on the home. Twenty percent is common, but others may specify a flat dollar amount.

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"Loss of Use" Coverage Kicks in When a Covered Loss Occurs

Additional living expenses are typically paid when a covered loss occurs. There is an exception if your home is not accessible due to civil authority or government mandate triggered by nearby damage. However, exceptional coverage is very limited, often to just two weeks.

Rental Limitations of "Loss of Use" Coverage

If you receive additional income by renting a portion of your home, the Part D limitation in coverage is even more important. This limit also applies to replacing lost rental income while the damaged house is being repaired.

Is Your Policy's "Loss of Use" Coverage Enough?

You won't know some important details to determine whether your "loss of use" coverage is enough before a disaster strikes. For example, you don't know:

  • How long you'll be out of the house.
  • What expenses you'll incur.

Luckily, your Trusted Choice® insurance professional understands this exposure and can help you weigh your options, including those that may increase your "loss of use" coverage limit.

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