Loss of Use Coverage Basics

When a fire, pipe break, or major storm forces you out of your home, this is the part of your policy that keeps you from bleeding money. Loss of use (also called additional living expenses or ALE) pays for temporary housing and increased living costs. When people complain about “insurance not paying enough,” it’s usually because they didn’t understand how this coverage works—or what triggers it.

If you want the full map of how all coverage parts work together, start with the tactical guide on homeowners insurance coverage.

1. When Loss of Use Coverage Actually Kicks In

Loss of use only activates if your home is uninhabitable because of a covered loss. That’s the line. If the cause isn’t covered, nothing here pays out—period.

• Fire or smoke damage making the home unsafe
• Significant water damage from a sudden leak
• Wind or tree impact that breaches the structure

Claims get denied fast when homeowners try to use ALE for maintenance issues or “voluntary displacement.” You must prove the home wasn’t livable.

2. What Loss of Use Actually Pays For

ALE covers the difference between your normal living costs and your forced increase during displacement. Insurers do not pay your entire hotel or rental bill—they pay the extra above what you’d normally spend.

• Hotel or short-term rental costs
• Increased food expenses (eating out, no kitchen)
• Laundry and storage fees
• Extra fuel/transportation costs

Insurers require documentation. If you don’t track receipts, you eat the cost. Simple as that.

3. What Loss of Use Doesn’t Cover

ALE is not a free-for-all. These are the most common denied items:

• Mortgage or rent at your damaged home (you’d pay that anyway)
• Upgraded living arrangements (“We stayed at a resort because it was closer”)
• Losses caused by excluded perils (flood, earthquake, neglect)
• Moving expenses not directly tied to displacement

If the loss falls into an excluded category, review flood insurance or earthquake coverage to fill the gaps.

4. Time Limits vs. Dollar Limits

Every policy sets this coverage up one of two ways:

• Dollar cap: e.g., 20% of the dwelling limit
• Time cap: e.g., up to 12 months of displacement

If your contractor is slow, or materials are delayed, you can run out of ALE before repairs finish. This is where people get stuck paying rent and mortgage at the same time.

5. How to Avoid Getting Underpaid

• Track every receipt—food, lodging, laundry, storage, fuel.
• Get written confirmation when your home is deemed uninhabitable.
• Send expenses weekly so nothing piles up or gets questioned later.
• Don’t upgrade your temporary housing unless you want to pay the difference.

The cleaner your paper trail, the faster your reimbursements.

6. When to Review Your ALE Coverage

Review limits anytime your living costs increase. If your household grew, if you moved to a more expensive area, or if rentals in your region are scarce, raise your ALE limit now—not after a fire when hotel prices double.

• Annual policy renewal
• After a major remodel or addition
• After cost-of-living jumps in your area

ALE looks simple until you need it. Then it becomes the difference between staying afloat and going into debt during displacement.