Loss of Use Coverage

Loss of use is a type of insurance coverage that helps with temporary living expenses if your place becomes uninhabitable due to a named peril.

Team LemonadeTeam Lemonade
loss of use

Loss of use is a type of insurance coverage – it’ll help with temporary living expenses if your place becomes uninhabitable due to a peril like a fire, windstorm, etc.

Loss of Use Coverage

What is loss of use coverage?

Loss of use coverage (code-named ‘Coverage D’ in your insurance policy) is a type of coverage your insurance company provides if your place becomes uninhabitable due to a peril. It’s one of the six common insurance coverages you’ll find on your basic homeowners insurance policy, and one of five types on a renters insurance policy.

Think about all the expenses you could rack up above your normal daily spend if you had to leave your place: hotel bills, eating out, laundry… the list goes on. Not being able to live at your own place is expensive. But luckily, your insurer will be there to help.

Keep in mind, though, you’ll only get reimbursed if the reason you weren’t able to live at home was something your insurance company agreed to cover in the first place.

What’s covered by loss of use insurance?

  • Additional living expenses
  • Fair rental value
  • Government intervention

Additional living expenses and loss of use coverage

The first type of loss of use is additional living expenses. Luckily, this type of coverage is pretty straightforward.

If your place becomes uninhabitable due to one of the perils laid out in your policy (either to your place or your property), you can submit any necessary expenses above your normal day-to-day spend.

It may help you out with things like:

  • Housing (hotel, motel, etc.)
  • Moving costs
  • Temporary storage of your stuff
  • Eating out (above the norm)
  • Laundry
  • Parking

Here’s an example of additional living expenses in practice:

Say you’re living in an apartment in Brooklyn with $1,000/month rent, and your food and entertainment expenses are $500/month. It’s the winter, and your pipe suddenly bursts even though it’s well-maintained and protected from the cold. Not only were all of your clothing and shoes ruined, but you’ll have to clear out for a week (and still pay rent).

Let’s say you get a hotel room ($500), and pay for meals there ($250). Since you would have typically paid $375 per week ($1500/4 = $375), your insurance company will most likely reimburse you for the extra $625 you had to pay to relocate (hotel + increase in food costs).

A small note here is that your insurer will only cover you for the shortest time possible.

So, if you were thinking, “Score! A month of a paid staycation at my favorite hotel,” then you might need to adjust your expectations a little. When bad stuff happens, the bills can rack up pretty fast, but lucky for you insurance will come to the rescue with additional living expenses.

Fair rental value and loss of use coverage

Fair rental value is the second part of loss of use.

This is less common than additional living expenses, but relevant for homeowners who rent out a portion of their home. If the portion rented out becomes unlivable due to fire (for example), you’ll be reimbursed for what you could have made during those days.

So if it’s unlivable for 4 days, you’ll be reimbursed for 4 days of rent if you were planning to rent it out.

There is a limit on how much you can claim for this area of loss of use (sometimes referred to as ‘Part D’) so make sure to carefully check your policy.

Government intervention and loss of use insurance

The last thing covered under loss of use insurance is the least common: government intervention.

If, for some reason, the civil authority (i.e. the people in charge of your community, town, city, state, etc.) says you cannot live in your place due to a peril affecting houses or buildings near you, you’ll be covered under loss of use insurance.

The best example of this would be wildfires in California:

When there’s a threat that your house may burn down, the state government might issue a mandatory evacuation of your area.

Since fire is a peril, you’d be covered for up to two weeks, under the Civil Authority clause under loss of use.

A few quick words, because we <3 our lawyers: This post is general in nature, and any statement in it doesn’t alter the terms, conditions, exclusions, or limitations of the policies issued, which differ according to your state of residence. You’re encouraged to discuss your specific circumstances with your own professional advisors. The purpose of this post is merely to provide you with info and insights you can use to make such discussions more productive! Naturally, all comments by, or references to, third parties represent their own views, and Lemonade assumes no responsibility for them. Coverage may not be available in all states. Please note that statements about coverages, policy management, claims processes, Giveback, and customer support apply to policies underwritten by Lemonade Insurance Company or Metromile Insurance Company, a Lemonade company, sold by Lemonade Insurance Agency, LLC.  The statements do not apply to policies underwritten by other carriers.

Please note: Lemonade articles and other editorial content are meant for educational purposes only, and should not be relied upon instead of professional legal, insurance or financial advice. The content of these educational articles does not alter the terms, conditions, exclusions, or limitations of policies issued by Lemonade, which differ according to your state of residence. While we regularly review previously published content to ensure it is accurate and up-to-date, there may be instances in which legal conditions or policy details have changed since publication. Any hypothetical examples used in Lemonade editorial content are purely expositional. Hypothetical examples do not alter or bind Lemonade to any application of your insurance policy to the particular facts and circumstances of any actual claim.