Imagine your home is severely damaged in a windstorm, but your homeowners insurance saves the day by covering repairs. However, what happens in the meantime while construction is underway? As it turns out, homeowners policies include Loss of Use — also called Additional Living Expense (ALE) — which reimburses the necessary increase in your living costs when a covered loss makes your home uninhabitable, and it may also apply when civil authorities temporarily prohibit access after a covered event. In 2025, the industry norm is that ALE is part of Coverage D and is typically set as a percentage of your dwelling limit, most often about 20% and sometimes 30% (Insurance Information Institute) (Allstate).
But every policy features different rules and limits surrounding loss of use coverage, and failing to understand them could mean you don’t get fully reimbursed. Coverage D typically combines Additional Living Expense, Fair Rental Value, and Civil Authority/Prohibited Use under one shared limit, and insurers usually pay only for the shortest time reasonably required to repair/replace the home or to relocate permanently. Many mainstream policies also impose time caps — commonly 12–24 months — and some jurisdictions extend availability after declared disasters. For example, California requires insurers to make ALE available for at least 24 months following certain declared emergencies, with potential extensions (California Department of Insurance). Here’s what to know so your Additional Living Expenses are set at realistic levels and documented for reimbursement.
How Does Loss of Use Coverage Work?
If your home is damaged or destroyed, your homeowners policy covers repairs or rebuilding, but the home may be unlivable during that period. Loss of Use/ALE reimburses the increase over your normal living expenses — for example, higher rent for a comparable temporary place, hotel taxes/fees, or extra meal costs — for the shortest time needed to complete repairs or to resettle permanently, subject to your policy’s Coverage D limit and any time cap (Insurance Information Institute) (NerdWallet).
This protection generally applies only after a covered peril makes the residence uninhabitable or when a qualifying Civil Authority/Prohibited Use order restricts access due to a covered event. Policies typically require direct physical loss to the home or nearby property; ordinary power outages, voluntary relocations, or closures without covered physical damage generally do not trigger ALE. Always confirm both the dollar limit (often 20%–30% of Coverage A) and the duration (e.g., 12–24 months), plus any separate sublimits or shorter time frames that may apply to Civil Authority usage (Allstate) (NerdWallet).
What Does Loss of Use Coverage Pay For?
Loss of Use coverage pays for the necessary increase in living costs to maintain your normal standard of living while you’re displaced. Eligible categories commonly include:
- Housing such as a hotel or comparable temporary rental property (including taxes/fees on lodging)
- Food for the increased cost of restaurant/takeout or groceries when kitchen access is limited
- Transportation including gas, parking, and public transport tied to the temporary location
- Personal items like toiletries and household supplies needed during displacement
- Laundry and dry cleaning
- Storage of personal items you can’t take with you
- Boarding fees for pets
- Moving costs between your home and temporary accommodations
- Lost rental income if you were renting out the property — typically paid as Fair Rental Value and reduced by expenses not incurred (e.g., utilities you would have paid) and limited to the time needed to repair/restore (Insurance Information Institute)
There is always a limit to what the insurer will pay. In current mainstream homeowners forms (HO‑3/HO‑5), Loss of Use/ALE is commonly about 20% of your dwelling (Coverage A) limit; some policies use 30%, and many carriers let you buy higher limits by endorsement. A minority of offerings use time‑based “actual loss sustained” wording for a defined period. For Renters insurance policies, today’s norm is a percentage of personal property (Coverage C), typically 20%–30%; several national digital carriers default to 30% — for example, Lemonade. Flat dollar caps like $3,000–$5,000 are far less common among major national policies than a decade ago. Always check both the dollar limit and the time limit (often 12–24 months); in some states, declared disasters can extend availability — California requires at least 24 months for qualifying events (III) (NerdWallet) (California DOI).
What Does Loss of Use Coverage Not Cover?
Loss of Use does not apply when the cause of loss isn’t covered. For example, if your home is damaged by flooding and you don’t carry separate flood coverage, you can’t claim ALE under a standard homeowners policy — you’d need flood insurance. Policies also won’t pay for closures or evacuations that aren’t tied to covered physical damage, and they don’t duplicate normal expenses you would have paid anyway; they reimburse only the increase required to maintain your household’s usual standard of living (Allstate) (III).
Don’t expect luxury accommodations or unlimited dining. Insurers typically require that expenses be reasonable and necessary, may set daily guidance or require pre‑approval for higher‑cost rentals, and can apply shorter sublimits for Civil Authority/Prohibited Use than for general ALE. Confirm what needs sign‑off, keep receipts, and align on a budget with your adjuster before committing to large costs (NerdWallet) (United Policyholders).
How to File a Loss of Use Claim
- Contact your insurer: Confirm the Coverage D dollar limit and any time cap (e.g., 12 or 24 months), plus sublimits for Civil Authority or Fair Rental Value. Ask about pre‑approval requirements for temporary housing and whether advance payments are available (III) (NerdWallet).
- Record your normal living expenses: ALE reimburses the increase over your baseline. Many insurers provide a worksheet; keep a simple ledger of pre‑loss rent/mortgage, utilities, groceries, and commuting so you can show the incremental increase (United Policyholders).
- Save every receipt: Keep itemized invoices and categorize them (lodging, meals, laundry, pet boarding, mileage). Organized monthly submissions speed reimbursement and reduce back‑and‑forth on “reasonableness” (NAIC consumer guide).
- File your claim: Depending on how long you’re displaced, you may submit expenses periodically or at the end. If delays are tied to covered causes (e.g., contractor backlog, permits), document the chronology and request extensions or continued ALE within the policy’s limits (United Policyholders).
Do I Need to Pay a Deductible When I File a Loss of Use Claim?
Most insurers won’t require you to pay a deductible when you file a Loss of Use/ALE claim. Instead, the coverage is constrained by your Coverage D limits and any time caps; you’ll typically pay the deductible on the underlying property damage claim (dwelling or personal property), not on ALE itself (Allstate) (Nationwide).
Just to be certain, double check your policy and ask your insurer to point you to the section addressing Coverage D deductibles and limits. The declarations page and policy form should clearly show the dollar limit, any time cap, and whether advance payments are available.
How Much Loss of Use Coverage Do I Need?
The amount of Loss of Use coverage is usually tied to your dwelling limit. Many homeowners policies default to 20% of Coverage A; some use 30%, and higher limits are often available. For example, if Coverage A is $200,000 and your ALE limit is 20%, you would have $40,000 for Additional Living Expenses. Also check the duration — many policies cap ALE to 12–24 months — and verify whether Civil Authority has a shorter period. In high‑cost areas or large households, consider buying up the ALE limit to cover several months of comparable rent, transportation, pet boarding, and meals (III) (NerdWallet) (State Farm) (Travelers).
Post‑2020 inflation has materially raised the prices that drive ALE — rent, lodging, and dining out — so pre‑inflation defaults may be insufficient. Government data show rent inflation running persistently elevated in recent years, food‑away‑from‑home prices rising steadily, and lodging‑away‑from‑home levels still well above early‑2020 baselines. As a result, your monthly “burn rate” for temporary living can be 15%–30% higher than your pre‑loss baseline, depending on local markets and how much you must dine out. If your policy defaults to ~20% of Coverage A (or 20%–30% of Coverage C for renters), ask about increasing ALE, selecting a form with a longer time cap (e.g., up to 24 months), and ensuring your dwelling limit and any inflation‑guard features reflect current reconstruction costs (BLS CPI) (CPI: Rent) (CPI: Food away from home) (CPI: Lodging away from home) (NOAA disasters).
What Is Additional Living Expenses Insurance?
Additional Living Expenses insurance is another name for Loss of Use under Coverage D. Policies typically bundle three related benefits under that shared limit: (1) Additional Living Expense (the increased costs to maintain your normal standard of living), (2) Fair Rental Value (lost rent for parts you rent out, reduced by expenses not incurred), and (3) Civil Authority/Prohibited Use (if government action bars access after a covered event). Wording and caps vary by insurer and state; always confirm both the dollar limit (often 20%–30% of Coverage A for homeowners) and the time limit (commonly 12–24 months), as well as any shorter period for Civil Authority (III) (Allstate).
The Bottom Line
Loss of Use (ALE) is a standard part of homeowners and renters insurance that helps pay the increased costs of living elsewhere while your home is being repaired after a covered loss. Typical homeowners limits are about 20% of dwelling coverage (sometimes 30%), and renters policies commonly use 20%–30% of personal property coverage — with many policies also applying 12–24‑month caps. Some states extend availability after declared disasters (e.g., California mandates at least 24 months). Because post‑2020 inflation has raised rents, lodging, and dining‑out costs, consider buying up ALE and confirming realistic durations. Pre‑agree on budgets, keep organized receipts, and align with your adjuster to avoid surprises at reimbursement time (III) (NerdWallet) (BLS CPI) (California DOI).
