What Is Loss of Use in Home Insurance?

Where would you stay if your home becomes uninhabitable due to a fire or flood? And how would you pay for the extra expenses associated with moving out?

Your homeowners insurance policy provides coverage to replace the items you lost in a covered event. However, did you know it can also help you if you have to leave your home? This is where loss of use will come into play. It can help you with those extra costs associated with having to move. This guide will help you learn how loss of use works, what items it covers, and how to file a claim if you ever need to.

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      What is loss of use on homeowners insurance coverage? 

      Home insurance loss of use coverage (also known as Coverage D) is part of your standard policy. This coverage provides you with financial protection if you must leave your home due to a covered event such as fire, water damage and other items outlined in your policy. It’s important to keep in mind that loss of use coverage won’t apply to any events that are not covered under one of your policies. For example, if you don’t have flood insurance and your home was damaged by a flood, loss of use will not cover the damages.

      If you need a place to stay while your home is under repair for damages caused by a covered event on your home insurance policy, loss of use will cover your living expenses. This helps you defray costs that are above what you normally pay for living expenses because you had to leave home.

      The amount of your benefit depends on your insurance carrier — some providers tie the benefit to your coverage on your home. For instance, if your coverage is $300,000 on your home and your provider determines your limit is 25% of your home’s coverage, this would place your benefit limit at $75,000.

      What does loss of use cover?

      Loss of use provides financial coverage for living expenses exceeding your normal amount because of your new living conditions. To demonstrate, if you have to move from your home into a hotel, you would still be responsible for paying the mortgage, insurance, taxes and other expenses related to the home.

      However, because you’re now living in a hotel, these costs exceed the amount of what you would normally pay. This is where loss of use kicks in. It would cover expenses such as your hotel stay and parking — if applicable. Suppose you had to put your pets into boarding while you waited to move back into your home, loss of use pays for that.

      It would also cover additional expenses for costs pertaining to food and fuel. Here’s how it works: you normally spent $150 on food when living at home. However, now that you’re in a hotel, you’re eating out more because your hotel doesn’t have a kitchen. Your expenses went from $150 a week to $250. With loss of use, you could claim $100 weekly since this is above what you normally spend on food. The same applies to fuel expenses. If you’re driving further to work now, then you’ll want to factor these additional costs into your claim.

      One other benefit to loss of use coverage is many providers do not require a deductible. This is the amount of money you pay before your carrier pays the rest of the approved claim.

      [Read: How to Find Cheap Homeowners Insurance in 2020]

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      Where is loss of use in my policy?

      When reviewing your homeowners documents, it will show you all the pertinent details of your policy including all coverages, how much loss of use coverage you have, and more. Typically, your policy documents will have a specific section for all coverages which includes loss of use. This shows what expenses your carrier covers and which events qualify for this coverage to kick in. If you have trouble finding this information or need clarification, you can ask your insurance provider for the basics that way you know how much you have as well as the steps needed on your end to file a claim.

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        How to file a loss of use claim

        If you have to move out of your home due to damage incurred by a covered event, then it’s important to notify your insurance carrier as soon as possible. Along with this, you’ll want to take pictures of any damage done to your home that’s rendered it uninhabitable.

        From there, you’ll also want to keep receipts demonstrating your cost of living expenses. Include in this hotel, dining, parking, fuel and pet boarding receipts. It’s also ideal to have a bank statement showing what your regular cost of living expenses are, as some insurance companies require this documentation. This gives them a baseline of what you normally pay for certain expenses that way they can calculate your benefit amount.

        Some providers allow you to start the claim online. You’ll have the opportunity to upload all supporting documents as well. For other providers, you could meet with your agent in person, supplying all the paperwork to them so they can handle the process from there.

        It’s important to follow all rules for filing claims with your insurance company. This includes supplying all the paperwork they request. It’s also important to only request reimbursement for items approved by your insurance carrier. Following instructions makes it easier for the insurance company to review and approve your claim. In turn, you could receive your money quicker.

        [Read: Home Insurance Quotes, Explained]

        We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

        Sean Jackson

        Contributing Writer

        Sean Jackson is a creative copywriter living in Florida. He’s had work published with Realtor.com, theScore, ESPN and the San Francisco Chronicle. In his free time, Sean likes to play drums, fail miserably at improv and spend time at the beach.

        Reviewed by

        • Nashalie Addarich
          Nashalie Addarich
          Insurance Editor

          Nasha Addarich is an editor at The Simple Dollar and a former attorney who specializes in home insurance, auto insurance, life insurance, and savings. She is a former contributing editor to Reviews.com.