Renters insurance loss of use coverage: How it works

What does loss of use coverage mean with renters insurance?

Loss of use coverage, also called additional living expenses (ALE) covers you 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 to do with 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 insurane adjuster for reiumbursement,

There are some things that are not covered under loss of use, says Ken Gregg, CEO and founder of Orion180. The damage has to be from a covered peril.

“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 coverage claim on renters insurance

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.

You'll follow the standard procedure for filing any claim with your insurer. Steps can be found on your insurance company's website or in the app, or you can call the claims line directly to get started.

What does loss of use cover?

As with any type of insurance, loss of use renters coverage applies to specific types of expenses. 

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 may be:

• 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

Just as only specific types of perils are covered under loss of use, there are also coverage limits as well as limits on how long this type of coverage applies. Every policy is different, but some general rules apply. The time frame for loss of use insurance is, generally:

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

Again, 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.