How Do Homeowners Policies Handle Loss of Use Claims?

Do you have a plan for temporary living arrangements if your home is uninhabitable after damage from a fire or other event?  You’re not alone, so don’t feel bad.  Fortunately, your homeowner’s insurance policy can help.  Loss of use claims are a convenient way to recover some of the additional living expenses (ALE) you have to pay while your home is being repaired.  Here are some things you need to know about loss of use coverage.

What Is Loss of Use Coverage?

Loss of use coverage is also referred to as ALE insurance or Coverage D.  It will pay reasonable living expenses you incur after a covered peril leaves your home temporarily unlivable. 

Overall, loss of use of coverage pays for expenses you wouldn’t normally incur if you were living in your home.  However, expenses caused if your home is flooded are excluded if you don’t have flood insurance.  

Check with your agent or insurance company to make sure your homeowner’s policy provides loss of use coverage.  

What Expenses Are Reimbursed by Loss of Use Coverage?

Typically, loss of use insurance covers these additional living expenses:

  • Temporary housing such as hotels or motels
  • Public transportation costs
  • Additional food expenses
  • Storage fees for household items
  • Expenses incurred for boarding pets
  • Cost of cell phone overages due to loss of landline
  • Cost of setting up utilities in the temporary home

If you are a landlord, your insurance will pay the fair rental value that you are unable to collect while the property is being repaired.  

Expenses Not Reimbursed by Loss of Use Coverage

Generally, loss of use protection is limited. For instance, it won’t pay for expenses you were already responsible for before the loss.   You must still pay your mortgage and homeowners insurance premiums.   Although loss of use coverage pays to board pets in certain situations, it does not include veterinarian bills such as grooming or upkeep.

How ALE Payments Are Calculated

Every homeowner’s situation is different, but this example of how ALE payments are calculated will give you an idea of what to expect:

ALEs Post-Claim Expenses Pre-Claim Expenses Amount Paid to You:
Groceries/Eating Out



Rental Home/Motel














*The above estimates are for illustrative purposes only.

When you need help with additional living expenses after your home is damaged, talk to your insurance provider right away.  The expenses must be pre-approved before you can be reimbursed.  This means you’ll have to pay the expenses up-front before the insurance will kick in.

Here’s what you should do to file a loss of use claim:

  •  Contact your provider and develop a schedule for submitting receipts.
  •  Keep receipts in chronological order to make the process easier.
  •  Indicate the reason for the expense on the receipt.
  •  Ask the contractor for an estimate of the time required to repair your home.

Once you submit all your bills and receipts, the claims adjuster will calculate how much is owed to you and will process the payment.

How Much Loss of Use Coverage Do I Need?

Loss of Use CoverageTemporary living arrangements can add up quickly, so you need to plan ahead.  Generally, loss of use coverage is calculated at 20% to 30% of your dwelling coverage limit.  For example, if your dwelling coverage limit is 0,000, the amount of ALE coverage limit will be about ,000.  

The best way to avoid unpleasant circumstances is to take steps today to ensure your family is protected.  You should estimate what you think your living expenses would be if your home is not habitable and your insurance provider can help you work out the details.

Some insurance companies provide a worksheet to help you calculate how much coverage you need.  Or, you can contact the provider to have professional help with the process.

Contact Sandifer Insurance Agency to Learn More About Loss of Use Coverage

Ultimately, the purpose of loss of use coverage is to help you and your family maintain your standard of living.  Being forced out of your home due to a disaster is stressful so you need to know someone’s got your back. The coverage also helps make the stressful situation more bearable for your budget.  

Sandifer Insurance Agency is a full-service, family-owned business with over 40 years of experience in making sure our customers have the right insurance at an affordable price.  We proudly serve customers in Cheraw and surrounding areas and are well-known for providing exceptional customer satisfaction.  Our primary goal is to ensure that your home is protected from any potential hazard.

If you would like to know more about the benefits of loss of use coverage, contact Sandifer Insurance Agency today.  Just so you know, we also offer automobile, life, farm, and commercial insurance.  One of our knowledgeable agents will be happy to help you choose the right coverage for your needs.   

We are conveniently located near historic downtown Cheraw, SC, so feel free to stop by.  Or, you can easily reach us by phone, email, or online.  We look forward to helping you get the peace of mind that comes from knowing you are well-prepared. 

Sources: – What Is Loss of Use Coverage in Home Insurance?

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