What is Loss of Use Coverage?
Loss of use coverage, or Coverage D, is an important part of most homeowners policies. It helps pay for additional living expenses if your home becomes uninhabitable due to a covered loss. This protection gives you and your family peace of mind by covering costs like temporary housing, food and other everyday needs while you get back on your feet.
What does loss of use coverage include?
Temporary housing costs
Coverage D helps pay for temporary housing costs when you’re displaced. This can include hotel stays, short-term rentals, or added rent payments until your home is repaired. In addition to homeowners policies, this coverage is typically available under condo and renters insurance as well.
Increased living expenses
When you can’t stay in your home, everyday costs often rise. Loss of use coverage helps cover the difference between your normal spending and these added costs, which may include:
- Transportation if your temporary housing is farther from work or school
- Pet boarding fees while your home is repaired
- Laundry services if you cannot use your washer and dryer
- Food expenses that go beyond your normal budget
Fair rental value (loss of rental income)
If you rent out part of your home and a covered loss forces your tenants to move out, loss of use coverage can help replace that lost income. This fair rental value protection is especially valuable for homeowners who rely on rental income to offset their expenses.
What is not covered under loss of use coverage?
Loss of use coverage helps with many added living costs, but there are a few exclusions to keep in mind:
Non-covered perils: If the damage that makes your home unlivable is not caused by a covered event, coverage won’t apply. For example, flood damage would not be covered unless you have separate flood insurance.
Expenses beyond normal living costs: Coverage only applies to additional expenses, not your regular bills. If your grocery costs are usually $150 per week and they increase to $250 while you are displaced, the coverage may reimburse the $100 difference.
Evacuations not ordered by civil authority: If you choose to leave your home when no civil authority has ordered an evacuation, expenses are typically not covered. Coverage usually applies only when evacuation is mandated due to a nearby covered peril.
How loss of use coverage limits work
Loss of use coverage limits vary by policy type and set how much your insurer will reimburse for added living costs after a covered loss.
Homeowners insurance: Often provides 10% to 20% of your dwelling coverage limit for loss of use.
Condo insurance: Usually based on a percentage of your combined dwelling and personal property coverage.
Renters insurance: Can be either a flat dollar amount or a percentage of your personal property limit.
Additional details to know:
Time limits may apply: Coverage often extends for a set duration, such as 12 or 24 months from the date of loss.
No additional deductible applies to loss of use coverage: The policy deductible would apply to the claim as a whole.
Documentation is important: Keep records and receipts for hotels, meals and other costs to ensure eligible reimbursement.
Understanding these limits helps you plan for the unexpected and ensures your loss of use coverage provides the support you need.
Get the right home insurance coverage for your needs
Loss of use coverage works alongside other important protections that together create a well-rounded policy. To fully protect your home and everything in it, it’s important to understand all the coverage options available to you:
Dwelling coverage: Protects the physical structure of your home from covered peril against damage from covered perils in your policy.
Other structures coverage: Covers buildings that aren’t attached to your home, like a detached garage, shed or fence.
Personal property coverage: Protects the belongings inside your home, like furniture, electronics, clothing and more, if they’re damaged in a covered loss.
Personal liability coverage: Provides protection for injury claims, lawsuits or damage to others’ property.
Medical payments to others coverage: Helps provide coverage for injuries to others if they’re accidentally hurt on your property, regardless of fault.
Regular policy reviews are a smart way to keep your coverage aligned with your lifestyle. Renovations, new features like pools or home offices, or changes in household members may affect your insurance needs. By reviewing your policy regularly, you can confirm that your loss of use coverage and other protections remain strong.
Your Policy, Policy Declarations or Amended Declarations in effect on the date of loss is the primary source of reference for your coverage, coverage limits and deductible amounts.
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