Home Insurance: What is Loss of Use Coverage

Article overview

This article explains what loss of use coverage is, when it applies and how it may help pay for additional living expenses if you can’t live in your home after a covered loss. Key highlights include:

• What it covers: Temporary housing, added food costs, extra transportation, pet boarding, laundry/storage and certain evacuation scenarios.
• What it doesn’t cover: Your normal ongoing bills (like mortgage/rent) and losses that aren’t covered by your policy (like wear and tear).
• How limits work: Loss of use is often expressed as a percentage of dwelling coverage (commonly around 20%, but varies by policy).
• How to file: Practical steps to document damage, save receipts and understand time/dollar limits before booking long-term stays.

What is loss of use coverage?

When something unexpected damages your home—like a fire, severe storm or burst pipe—your homeowners insurance may help cover the cost of repairs. But if the damage is serious enough that you can’t live there while repairs are made, hotel stays, food and added transportation costs can add up quickly.

Loss of use coverage (also called additional living expense, or ALE) is the part of many homeowners, condo and renters policies that can help cover those extra costs while your home is being repaired.

What does loss of use generally cover?

Loss of use covers the additional expenses you incur above what you’d normally spend if a covered loss forces you out of your home. It’s also called additional living expense (ALE) insurance and is common in most homeowners policies.

For example, say a burst pipe floods your bedroom and bathroom, then water damages your kitchen. Now, you have to stay in a hotel and eat out nightly. Your policy may reimburse the difference between what you’re spending now and your typical grocery bill.

Common expenses loss of use coverage include:

• Temporary housing: A hotel or short-term rental, for the duration of the repairs.
• Additional food expenses: Including restaurants and groceries, if your kitchen is unusable.
• Extra transportation costs: Fuel or public transportation, if you’re staying farther from work or school than usual.
• Pet boarding: If your temporary housing doesn’t allow pets, you may be reimbursed for boarding.
• Laundry and storage unit costs: If your temporary housing doesn’t have laundry services, or you need storage for furniture or belongings from the damaged areas of your home.

Loss of use coverage is designed to help bridge the gap between your normal costs and the higher costs that come from being displaced from your home.

What loss of use generally doesn’t cover

Remember that loss of use generally covers additional living expenses, not your regular ones. Your mortgage or rent payment, utilities and other costs you’d normally pay continue during displacement and aren’t reimbursed.

Loss of use also only applies to damage covered by your policy. If a tree falls on your roof during a storm, that damage may be covered by your homeowners insurance.

But if your roof deteriorates from age and the resulting water damage makes your kitchen unusable, that’s considered normal wear and tear and typically isn’t covered. That means loss of use wouldn’t apply either.

Another situation not covered is a mandatory evacuation or police blocking your street due to a disaster, even if your home isn’t directly damaged. 

What insurance coverage do homeowners need for storm damage?

Review your homeowners insurance policy

Spring is a good time to review your homeowners insurance policy with a licensed agent to ensure your coverage still meets your needs. Your agent can explain what is covered, review deductibles and identify any coverage limits. It’s also a good time to ask about flood insurance, which is not included in standard homeowners policies and may require a waiting period before coverage begins.

AAA Insurance also recommends contacting a licensed AAA Insurance agent for a free policy review through the AAA Triple Check^® (not available in Colorado). This review helps ensure coverage reflects lifestyle changes and that homeowners receive the best rate and available discounts. The AAA Triple Check^® is available to everyone, including homeowners not currently insured by AAA Insurance. Learn more at AAA.com/Insurance.

How much loss of use coverage do you have?

Loss of use coverage limits vary depending on the type of policy you have.

For homeowners, coverage is typically up to 20% of your dwelling coverage (though some may range from 10% to 30%). For example, if your home's insured value is $400,000, also known as your dwelling coverage limit, that means you may have $80,000 in loss of use coverage, depending on your policy.

Loss of use coverage can also apply to condo owners and renters. For condo owners, coverage is typically a percentage of your combined dwelling and personal property coverage limits. And for renters, coverage may be a flat amount or a percentage of your personal property coverage, depending on your insurer.

Some insurers set a time limit for the duration of loss-of-use coverage after a covered loss. Checking your policy before you need it can help you avoid surprises. 

How to make a loss of use claim

If you must leave your home due to a covered loss, there are a few things you can do to make the claims process smoother.

• Document everything: Take photos of the damage before any repairs begin. Dates and photos matter when an adjuster reviews your claim.
• Keep every receipt: Your insurer will typically require copies of receipts for additional living expenses before issuing reimbursements.
• Contact your insurer early: If the damage was caused by a covered event, loop in your insurance company before any repair work begins and before booking long-term accommodations.
• Know your limits: Check whether your policy has a time limit on loss of use coverage, not just a dollar limit, so you can plan accordingly.

Because loss of use only covers expenses above your normal spending, it helps to know your baseline before you file a claim. Having a rough sense of what you typically spend on transportation, groceries and utilities each month can help make the reimbursement process smoother.