Loss of Use Coverage
The section of a homeowner's insurance policy (Coverage D) that pays for additional expenses incurred when the home is uninhabitable due to a covered loss, including temporary housing, meals, and storage.
What Is Loss of Use Coverage
Loss of use coverage, designated as Coverage D on a standard homeowner's insurance policy, reimburses the policyholder for additional living expenses incurred when their home is made uninhabitable by a covered peril, covering the cost difference between their normal living expenses and the inflated costs of living elsewhere during repairs. This coverage exists because a homeowner who is paying a mortgage on an uninhabitable home should not also have to bear the full cost of living somewhere else.
What Qualifies as Uninhabitable
The home must be rendered uninhabitable by a covered loss. Structural damage, active water intrusion, fire damage, hazardous materials exposure, and compromised electrical or plumbing systems all qualify. The standard is whether a reasonable person could safely live in the home during repairs. If the only damage is a section of roof being replaced over a few days with no interior exposure, the carrier may argue the home is still habitable.
Coverage Limits and Duration
Loss of use coverage is typically capped at 20-30% of the dwelling coverage amount and has a time limit of 12 to 24 months. On a $300,000 dwelling policy with 20% loss of use, the maximum is $60,000. For large losses with 6 to 12 month repair timelines, that amount can be consumed quickly by monthly rental costs, storage fees, and meal expenses. Contractors can help homeowners by providing realistic repair timelines so the homeowner can budget their loss of use coverage over the expected repair period.
Frequently asked questions
Loss of use coverage pays for the additional costs above your normal living expenses when you are displaced from your home due to a covered loss. This includes hotel or rental housing, restaurant meals above your normal food budget, additional commuting costs, temporary storage for belongings, and laundry expenses.
Loss of use coverage lasts for the reasonable time required to repair or replace the damaged dwelling. The policy may set a time limit (typically 12 to 24 months) or a dollar limit (usually 20-30% of dwelling coverage), whichever is reached first.
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