Loss of Use
Loss of use coverage, also known as additional living expenses (ALE) coverage, is the part of homeowners insurance that covers temporary housing and extra expenses when your home becomes uninhabitable due to a covered peril. It helps you maintain your standard of living while your home is being repaired or rebuilt.
Definition maintained by the InsurTool Editorial Team. Last reviewed .
Key Takeaways
Loss of use coverage (also called additional living expenses or ALE) pays for temporary housing and extra expenses when your home becomes uninhabitable due to a covered loss like fire, wind, or water damage. It covers rent, hotel bills, restaurant meals, and other costs that exceed your normal living expenses. Coverage typically ranges from 20-30% of your dwelling coverage limit.
What is Loss of Use Coverage?
In plain English: Loss of use coverage pays for your living expenses if your home is damaged so badly you can’t live there while it’s being fixed. That includes hotel bills, restaurant meals, and other extra costs of being displaced from your home.
Use our Home Insurance Calculator to estimate your loss of use coverage needs.
What Loss of Use Coverage Includes
- Temporary Housing — Rent for an apartment, hotel bills, or other temporary accommodations.
- Additional Food Costs — Cost of eating out when you can’t cook at home.
- Transportation Costs — Extra commuting costs if your temporary home is farther from work.
- Storage Fees — Cost of storing your belongings while your home is being repaired.
How Loss of Use Coverage Works
Understanding the Reimbursement Process
Loss of use coverage reimburses you for the difference between your normal living expenses and your temporary living expenses. For example, if your monthly rent was $1,500 but you’re paying $2,000 for temporary housing, your policy would cover the $500 difference.
| Coverage Type | What It Protects | Typical Limit |
|---|---|---|
| Dwelling | The physical structure of your home | Based on rebuild cost |
| Personal Property | Your belongings inside the home | 50-70% of dwelling limit |
| Liability | Lawsuits if someone gets hurt on your property | $100,000 - $500,000+ |
| Loss of Use | Hotel/food if you can’t live at home | 20-30% of dwelling limit |
| Other Structures | Detached garages, sheds, fences | ~10% of dwelling limit |
Coverage Limits
Typical Coverage Amounts
Loss of use coverage is typically a percentage of your dwelling coverage, usually 20-30%. For example, if you have $300,000 in dwelling coverage with 20% loss of use coverage, you have $60,000 in loss of use coverage.
Most policies also have a time limit, typically 12-24 months, for how long you can receive benefits.
Common Scenarios Covered
- Fire damage: When your home is damaged by fire and needs repairs
- Wind or hail damage: When severe weather makes your home uninhabitable
- Water damage: When a burst pipe or leak damages your home
- Smoke damage: When smoke from a fire makes your home unlivable
- Vandalism: When intentional damage makes your home unsafe
What Loss of Use Coverage Doesn’t Include
- Normal living expenses: Only covers expenses above your normal costs
- Uncovered perils: Losses from flood, earthquake, or other excluded events
- Business expenses: Additional costs related to running a business from home
- Luxury accommodations: Coverage is based on reasonable expenses
Why Loss of Use Coverage is Important
Loss of use coverage prevents you from being stuck with expensive temporary housing costs after a disaster. According to the Insurance Information Institute (III), the average temporary housing cost after a major loss is $2,000-$3,000 per month.
Q: How long does loss of use coverage last?
A: Most policies have a time limit of 12-24 months. But, some policies may extend coverage if repairs take longer than expected.
Q: Does loss of use coverage cover my mortgage payment?
A: No, loss of use coverage doesn’t cover your mortgage payment. It only covers temporary housing and additional living expenses.
Q: Can I stay in a hotel while my home is being repaired?
A: Yes, loss of use coverage typically covers hotel expenses, as long as they’re reasonable and necessary.
Q: Is loss of use coverage included in renters insurance?
A: Yes, renters insurance also includes loss of use coverage to help you find temporary housing if your rental becomes uninhabitable.
References
Related Terms
Homeowners Insurance Dwelling Coverage Personal Property Deductible Coverage Limit
About this definition
Written and checked against the primary sources linked on this page by the InsurTool Editorial Team. Definitions describe how these terms are used in the United States; policy wording differs between insurers, and state law changes the meaning of some terms. Your own policy document is the authority for your coverage.
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