Loss of Use Coverage: 4 Things You Need to Know


Imagine a situation where a fire, severe weather, or other covered perils damage your home. Because of this, your home became uninhabitable.

During the process of repairing or rebuilding your home, loss of use coverage can help alleviate the financial burden. It ensures that you and your family have a place to stay and can maintain your standard of living while your home is being restored.

But what exactly is this?  Read on to learn about the loss of use coverage.

1. Coverage Details


Loss of use coverage is part of a homeowners insurance policy. Insurance coverage helps you pay for extra living costs if a covered loss, like a fire or natural disaster, makes your home unusable.

It usually pays for temporary housing costs, like hotel bills, rent, or the price of a temporary home. It could also pay for extra expenses, like higher food costs or moving costs for your things.

Depending on your contract, the amount of coverage and how long it lasts can differ. It’s essential to talk to your insurance company about the details. This type of coverage also applies to businesses, cars, and property insurance with slight variations depending on the setting.

2. Coverage Trigger

If your home can’t be lived in because of a covered loss, your loss of use coverage usually kicks in. This means that the damage to your home must be so bad that it’s no longer safe to live in, or you can’t live there at all. Typical scenarios where the loss of use coverage can be claimed are:

  • Damage from fire or smoke
  • Severe weather events (hurricanes, tornadoes, hailstorms)
  • Water or plumbing issues
  • Natural disasters (earthquakes, flooding, landslides)

It’s important to note that loss of use coverage is typically subject to the terms and conditions outlined in your policy. Make sure to discuss this with your insurance provider before making a claim.

3. Time Limit

There is a time limit or maximum payout period for loss of use coverage. This means that you will only be covered for a certain amount of time, which is usually written in your insurance.

This time limit is essential to know because it can be anywhere from a few months to a year or more. The coverage will no longer apply once the time limit has passed or the maximum payout amount has been paid out.

When filing a claim, it’s best to start the process immediately after the event that makes the coverage apply. It’s important to remember that the exact time frame for making a loss of use claim may depend on the terms and conditions of your homeowner’s insurance policy.

4. Documentation and Record-Keeping

When making a Loss of Use claim, it’s essential to write down and keep track of all the extra living costs you had to pay because of the accident. This includes receipts for meals, temporary housing, and other qualifying additional living expenses.

Proper paperwork will help you prove your claim. This ensures that your insurance company gives you the right amount back.

Consider Adding Loss of Use to Your Policy

Understanding the details of your Loss of Use coverage is crucial to make the most of its benefits. It acts as a safety net, offering financial assistance for temporary housing, food costs, and even storage fees.

This coverage can make a challenging and uncertain time more manageable by providing peace of mind and a sense of stability. Talk to your insurance agent to ensure the coverage is right for you.