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What is Loss of Use Coverage in Home Insurance?

Updated: Jul 11, 2023

If your house is severely damaged and you need to temporarily move out, your home insurance policy's loss of use coverage will pay for additional living expenses (ALE) including hotel stays and restaurant meals.



It's for you to be familiar with Loss of Use Coverage in Home Insurance. Read Now!

Loss of use in home insurance


What exactly does the loss of use coverage cover?

If your house is severely damaged and you need to temporarily move out, your home insurance policy's loss of use coverage will pay for additional living expenses (ALE) including hotel stays and restaurant meals.


What exactly does home insurance's loss of use policy cover?

The portion of home insurance known as loss of use coverage pays you back for your indirect financial losses during an insured catastrophe.



This protection includes three distinct types of coverage:


Additional Living Expenses ( ALE )

Additional living expense (ALE) insurance is a type of protection provided by a homeowner's, condo owner's, or renter's insurance policy that pays for additional living expenses paid by a policyholder if they are temporarily evacuated from their house. The coverage typically represents 10% to 20% of the insurance that protects the home.


Fair rental value

If the tenants are unable to occupy the home due to a loss covered by the policy, the Fair Rental Value coverage offers up to 10% of the dwelling amount.


Civil authority prohibited the use

Your insurance will cover any additional living costs or fair rental value reimbursements for a maximum of two weeks if the government requires you to evacuate your house due to a natural disaster.


What can additional living expenses (ALE) pay for?

The types of expenses you can claim should be mentioned in your policy, often, this depends on whether the expense is required. However, insurance companies frequently provide coverage for the following:

  • Hotel stays

  • Temporary rentals

  • Additional fuel or mileage expenses

  • Additional grocery or restaurant bills

  • Rental cars

  • Transportation costs

  • Dry cleaning expenses

  • Storage units

  • Daycare costs

  • Pet Boarding


How much coverage for loss of usage do I need?

Although coverage limitations vary from company to company, loss of use coverage is normally set at 20% of your home's insured value or your dwelling coverage limit.


For example:

If your ALE limit is set at 20% and your home has $400,000 in dwelling coverage, your ALE coverage will not exceed $80,000. This implies that until your home is restored or you locate a new permanent location, you will have $80,000 in ALE coverage if a tornado damages your home and you need to live someplace else.


For more information and additional questions regarding loss of use on house insurance, email us at info@insureinct.com or call us at (860) 440 7324!

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