Insurance Coverage for Loss of Use of Your Home

If you are forced to flee your home because of damage caused by fire, windstorm or some other covered peril or if you are ordered to evacuate your home, the loss of use coverage provides peace of mind. It pays for your hotel and restaurant bills while you are away from your home, but it does have some limitations.

Residence is Uninhabitable

Loss of use coverage is one of the most important features of your homeowner's insurance policy. It is listed as Coverage D in your policy and is also referred to as "additional living expense" coverage. You become entitled to benefits under this coverage when:

  • Your home is damaged to the extent that it becomes uninhabitable as a result of an insured peril, such as damage caused by fire, windstorm or lightning, or
  • You are ordered to evacuate your home by a lawful authority, such as the fire department, the sheriff's office or a disaster response team

Whether your home becomes uninhabitable can be an issue when dealing with insurance claims agents. When the entire home is a shambles or if all the bathrooms are damaged and not functional, the determination is more obvious. When there is minor fire damage to some kitchen cabinets or to the living room floor, your insurer may deny your claim.

Coverage Limits

Typically, standard loss of use coverage will pay or reimburse you for any additional living expenses you incur for the period of time that it takes to repair or rebuild your residence or to relocate. Most policies place limits on the benefits available, such as:

  • A maximum time limit, or
  • A percentage of your dwelling coverage (Coverage A) policy limits

While the insurer must reimburse you for any increased expenses you incur to maintain your standard of living, there are restrictions on the type of expenses that are reimbursable. For example, the following types of expenses are covered:

  • Temporary housing including leased premises or motels
  • Meals where the costs exceed the amount you would normally pay if you were living in your residence
  • Moving costs and temporary storage of household or personal items
  • Laundry and dry cleaning expenses
  • Parking fees

Loss of use coverage is available in dwelling, condominium owner's and renter's insurance policies. Many insurers offer extended or expanded loss of use coverage that can be added to your policy as an endorsement.

Fair Rental Value Option

If you rent a part of your residence to a tenant, you can purchase optional fair rental value benefits. This option will reimburse you for the amount of rent that you would have received if your residence was not damaged. The amount will be adjusted by subtracting your costs as a landlord, such as utility bills, cable television and so on.

Related Resources on sm

- Dealing with Insurance Companies
- Property Insurance articles and information
- Homeowner's and Renter's Insurance FAQ
- Finding an Insurance Attorney
- Find a Property Insurance attorney in your area
- Visit our Insurance Claims message board for more help

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