Insurance Coverage for Loss of Use of Your Home

By Ilona Bray, J.D., University of Washington Law School
How much will your homeowners' insurance pay for the extra expenses you incur due to living away from your damaged home?

If you are forced to flee the home you own because of damage caused by fire, windstorm or some other covered peril or if you are ordered to evacuate during a disaster that damages your or your neighbors' properties, the "loss of use" coverage portion of your homeowners' insurance policy (also called “additional living expenses” or “Part D” coverage) should provide some peace of mind.

(Not all homeowners' policies have this, however. Hopefully you chose to include it in yours.)

Loss of use coverage pays for things like your hotel or apartment rental, storage, and food bills (if they exceed what you were paying before), while you are waiting for your home to be fixed or are making arrangements to relocate. Either process could, after all, take many months, while you assess the damage and make and execute plans.

The idea of loss of use coverage is to maintain the standard of living you normally enjoyed before. Don't expect to take up a newly luxurious lifestyle: This coverage comes with various limitations. On the other hand, you shouldn't skimp or move into a tent just to save your insurer money.

Only Damage From Covered Losses Will Trigger This Coverage

If the damage to your house was caused by something your policy doesn't cover in the first place—for example, a a flood, which is excluded in most homeowners' policies—you won't be able to claim loss of use coverage, either. And federal flood insurance doesn't provide loss of use coverage.

The one exception is the coverage for governmentally mandated evacuation. (This sometimes goes by a slightly different name: prohibited use coverage.) Some damage must still have occurred, however. An evacuation in anticipation of a disaster that doesn't materialize won't entitle you to make an insurance claim.

How Bad Must Your Home's Condition Be to Trigger This Coverage?

As a homeowner, you would normally become entitled to benefits under the loss of use portion of your policy if and when:

  • your home is damaged to the extent that it becomes uninhabitable (unfit to live in) 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 civil or governmental authority, such as the fire department, the sheriff's office, or a disaster response team.

Whether your home has truly become 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 fire damage to kitchen cabinets or to the living room floor, your insurance company may deny your claim.

What Expenses Will Be Covered?

The following types of expenses are normally covered by the loss of use coverage portion of a homeowners' insurance policy:

  • temporary housing, including leased premises of a size no greater than what you lived in before, hotels, or motels (but remember, your mortgage company will still expect you to pay the mortgage on your home, damaged or not)
  • pet boarding
  • meals or food preparation items, where the costs exceed the amount you would normally pay if you were living in your home
  • moving and temporary storage costs for household or personal items
  • laundry and dry cleaning expenses, and
  • parking fees or additional mileage costs getting to work, place of worship, or family activities.
  • mileage related to planning and shopping for home repair.

This is not an exclusive list. You can request coverage from your insurance company for any other living expenses you must pay for only because of the damage to your house. Of course, you'll need to be organized about saving receipts for your expenditures.

What Are the Limits on This Coverage?

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 (within reason; you can't delay action and expect coverage). Most policies place the following limits on the benefits available:

  • a maximum amount of time, and/or
  • a percentage of the dollar amount of your dwelling coverage (Coverage A), such as 20% of that limit.

Carefully read your policy and talk to your insurance agent for details. Your insurance company may set additional requirements or prerequisites for payment of loss of use coverage.

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