Renters insurance loss of use coverage

What does loss of use renters insurance mean?

Loss of use coverage, also called additional living expenses (ALE) covers extra expenses incurred when you can't live in your home for a time. It will pay for necessary living expenses that are above and beyond your normal living expenses while you are temporarily living elsewhere.

The damage has to be due to a covered peril listed on the renters insurance policy. Covered perils include:

Fire
Hail damage
Windstorm damage
Lightning damage
Smoke damage
Vandalism

Loss of use is automatically included in your renters insurance policy. It is also known as additional expenses coverage.

Loss of use will also kick in if you are forced out of your home due to a government-issued mandatory evacuation order.

How does renters insurance loss of use work?

When you are forced to move out of your home due to a covered loss, you will file a claim with your insurance company. One claim will encompass everything related to the damage. That includes both damage to your personal property and loss-of-use benefits. Your insurance company will notify you of the available loss-of-use coverage when processing the claim.

You will need to keep receipts for all of your additional living expenses to provide to the insurance adjuster for reimbursement.

Loss of use coverage only applies when the damage was caused by a covered peril, says Ken Gregg, CEO and founder of Orion180.

“On the other hand, if your apartment was severely damaged in a flood, renters loss of use coverage wouldn’t apply because renters insurance doesn’t cover flood damage and flood policies exclude loss of use coverage," he says.

How to file a loss of use renters insurance coverage claim

You'll follow the standard procedure for filing any claim with your insurer. Start by filing a claim on your insurance company's website, in the app, or you can call the claims line directly to get started. An adjuster will be assigned and will walk you through the next steps, including collecting documentation and determining what’s covered and the limits of your coverage.

There's no need to file a separate claim for loss of use if you have already filed a claim for damage to your personal property in the same loss. The coverage will automatically be part of the same claim.

What does loss of use cover?

Loss of use covers temporary living expenses above and beyond your usual bills, such as hotel stays, restaurants, pet boarding, transportation expenses and storage units.

Additional living expenses are any expenses you incur as a direct result of your inability to use your home. Due to relocating while your rental is uninhabitable, you are likely to accrue expenses you would not normally have. These expenses are your additional living expenses. Here are some specific examples of these expenses:

Temporary living, such as a hotel or motel
Dining out
Pet boarding
Storage units
Extra fuel usage

Coverage limits for loss of use insurance on a renters policy

Loss of use coverage limits are set as a percentage of your personal property coverage, often 20% to 30%. There is also a time limit set on your benefits. The time frame for loss of use insurance is generally:

A given number of months, such as 12 or 24
The time it takes for the damage to be repaired
The time it takes for you to find a new, permanent home

Generally speaking, your policy will cover you for the option that takes the least amount of time. The goal is to have you back in a safe, comfortable living situation as quickly as possible.

FAQ: Loss of use with renters insurance

Is loss of use subject to a deductible?

No. There is no deductible to use your loss of use coverage. However, you'll have to pay the deductible on the property damage claim that caused you to have to leave your home.

How much loss of use coverage do I need?

You need enough loss of use coverage to pay for covered expenses until you’re able to move back home. Loss of use coverage is generally set at 20% or 30% of your personal property value. If your personal property limit is set at $50,000, and you have 30% of that as loss of use coverage, your loss of use limit is $15,000.

Does renters insurance cover hotel stays?

Yes. If your rental home suffers a loss of use and becomes unlivable due to a covered loss, your insurance company will cover your hotel stay while the home is being repaired. However, because there are limits on loss of use coverage, this is not a permanent solution. If it is taking longer than expected for your home to be repaired, your insurance provider may work with you to find a more suitable, permanent residence.