Loss of Use Insurance Claim

Q: Can I choose any hotel or rental?

You must choose 'reasonable and comparable' accommodations. A luxury hotel when you live in a modest home may not be covered. Choose accommodations similar in quality to your home.

What Is Loss of Use Coverage

Loss of Use coverage, also called Additional Living Expenses (ALE) or Coverage D, pays for increased costs when your home is uninhabitable due to covered damage. This coverage is valuable but often misunderstood and underutilized.

When Coverage Applies

Loss of Use coverage applies when your home is uninhabitable due to covered damage. "Uninhabitable" means you can't safely live there—no power, no water, structural damage, or health hazards. Minor damage that doesn't prevent occupancy doesn't trigger Loss of Use coverage.

What Triggers Loss of Use Claims

Common triggers include fire damage making the home unsafe, water damage requiring extensive drying and repairs, storm damage compromising the structure, or hazardous conditions like mold or sewage. The key is that the damage must make the home uninhabitable, not just inconvenient.

Coverage Duration

Loss of Use coverage continues until your home is repaired enough to be habitable, subject to policy limits. Insurance companies often dispute when your home becomes habitable again, trying to cut off coverage before you can reasonably return.

Coverage Limits

Most policies limit Loss of Use to a percentage of dwelling coverage (typically 20-30%) or a time limit (usually 12-24 months), whichever is reached first. Once you hit either limit, you're responsible for additional expenses.

What Loss of Use Covers

Temporary Housing

Hotel, rental, or temporary accommodation costs

Increased Food Costs

Restaurant meals vs. normal grocery expenses

Storage Costs

Storage units for furniture and belongings

Pet Boarding

Kennel or pet hotel if pets can't stay with you

Increased Transportation

Additional commuting costs from temporary location

Laundry Costs

Laundromat expenses without home washer/dryer

How to File Loss of Use Claims

Proper documentation and timely filing ensure you recover all Loss of Use expenses.

Notify Your Insurer Immediately — Report that your home is uninhabitable and you need temporary housing
Keep All Receipts — Save every receipt for hotels, meals, storage, and other covered expenses
Document Normal Expenses — Show what you normally spend on housing, food, and other items
Choose Comparable Housing — Select temporary housing similar in quality to your home
File Claims Regularly — Submit Loss of Use claims monthly rather than waiting
Track Your Limits — Monitor spending against your coverage limits
Get Pre-Approval for Major Expenses — Confirm coverage for expensive items before incurring costs
Challenge Reasonableness Disputes — If the insurer says expenses are too high, provide market rate evidence
Fight Early Cutoffs — Document why your home remains uninhabitable if the insurer tries to end coverage early
Consider Tax Implications — Loss of Use payments are generally not taxable, but consult a tax professional

Frequently Asked Questions

How do I prove my home is uninhabitable?

Document the damage with photos, get contractor assessments stating the home is unsafe, and show that essential services (power, water, heat) are unavailable.

Can I choose any hotel or rental?

You must choose "reasonable and comparable" accommodations. A luxury hotel when you live in a modest home may not be covered. Choose accommodations similar in quality to your home.

What if I stay with family?

You can only claim actual increased expenses. If you pay family rent or have increased food costs, those may be covered. But you can't claim expenses you're not actually incurring.

Does Loss of Use cover my mortgage?

No. Loss of Use covers increased costs, not normal expenses. You still pay your mortgage, but Loss of Use covers the additional cost of temporary housing.

What if repairs aren't done before my coverage limit expires?

You're responsible for expenses after hitting your coverage limit, even if repairs aren't complete. This is why tracking your spending against limits is critical.