Loss of Use Coverage: Covers Your Extra Living Costs When Your Condo or Townhome Is Unlivable
If disaster strikes and your condo or townhome becomes uninhabitable due to a covered claim, loss of use coverage pays for your temporary living expenses. It’s peace of mind that you won’t have to bear the cost of a hotel or rental while your home is being repaired.
See Loss of Use Coverage in Action
Real scenarios that show exactly when and how loss of use coverage protects you.
Water Pipe Leak Displacement
Maria’s upstairs neighbor had a major pipe burst, which flooded her condo unit below. Her loss of use coverage paid for her hotel stay, including meals and laundry costs, while repairs were underway. Instead of couch surfing for weeks, Maria only paid her usual utility bills and was back home in days.
Fire Damage—Rental Relocation
The Davis family’s townhome suffered a kitchen fire that made the unit unsafe for weeks. Loss of use coverage covered the cost of renting a similar nearby home and daily commute expenses for work and school during repairs. The Davises avoided thousands in unexpected costs and continued their daily lives with minimal disruption.
Major Storm Evacuation
After a severe storm caused structural damage, Aaron and his family couldn’t live in their townhome for over a month. Loss of use coverage paid for their extended hotel stay, pet boarding, storage, and extra meal expenses. Instead of financial hardship, the family focused on recovery and safely returning home.
Loss of Use Coverage Explained: The Details That Matter
The complete picture: what's covered, what's not, and how to decide if you need it.
Loss of Use Coverage (Plain English)
Loss of use coverage pays for your extra living expenses if your unit can’t be lived in after a covered loss (like fire or water damage). When your condo or townhome becomes uninhabitable, this coverage covers the cost of a temporary place to stay, meals, transportation, and similar needs up to your policy’s limit. The key thing to understand is that it protects your standard of living while your home is fixed.
The Fine Print
Deductibles apply to the main property claim, but loss of use pays actual extra expenses (not utilities still owed, for example). Limits are usually a percentage of your dwelling coverage and vary by policy. Payment is for reasonable additional expenses—not upgrades or luxuries. You must have a covered loss (like fire, sudden water damage) to access this benefit.
Loss of Use vs. Other Coverages
Loss of use coverage is NOT the same as renters insurance or personal property coverage. Loss of use covers your living expenses when you can’t use your home, while personal property coverage replaces damaged belongings, and renters insurance protects tenants (not owners). You typically need both to be fully protected.
Who Needs Loss of Use Coverage?
You typically need this coverage if:
- You own a condo or townhome
- Your mortgage or HOA requires comprehensive protection
- You would face a financial hardship paying for hotels, meals, or short-term rentals out of pocket
You might skip this coverage if:
- You have alternative housing available at no cost for extended periods
Limits and Options
Loss of use coverage is usually set as a percentage (20-30%) of your dwelling coverage. For example, if your unit is insured for $300,000 and your policy allows 20%, your loss of use limit is $60,000. There is no separate deductible for loss of use, only for the initial claim. Some policies may offer extended options or increased limits—ask your advisor what fits your needs.
What's NOT Covered by Loss of Use
This coverage does NOT cover:
- Damage from non-covered events: such as floods or earthquakes, unless your policy specifically includes them
- Voluntary moves or upgrades: choosing to relocate, move to costlier accommodations, or add extras not needed for standard living
For those risks, you'd need specialty coverage or separate policies.
See Your Price with Loss of Use Included
Now that you understand loss of use coverage, see how affordable this protection can be with personalized quotes from 26+ carriers.
Your Local Coverage Experts
1,430+ customers trust our expertise to explain coverage clearly and find the right protection for their specific needs.
4.9/5 Stars
Google Reviews from real customers, just like you
97% Retention
Customers stay with us year over year over year
Independent
We work for you, not insurance companies
Local
Fort Collins owned & operated since 1992
How Loss of Use Coverage Actually Works
Understanding exactly what happens when you file a loss of use claim—from start to finish.
The Claims Process
- Report the Loss: Contact your insurance broker or carrier as soon as your unit is unlivable after a covered peril. Provide details and photos if safe.
- Get the Damage Assessed: An adjuster inspects the home and confirms it’s uninhabitable due to a covered claim (like fire or water damage).
- Arrange for Temporary Living: You secure a hotel or rental. Save receipts for meals, pet boarding, mileage, storage, and similar needs.
- Submit and Settle: Submit your expense receipts. The insurer pays allowable additional expenses—within your policy limit—until it’s safe to move back in.
What You Pay
Your deductible—typically $500 to $2,500—applies to the primary property claim, not to loss of use expenses directly. Your premium covers access to loss of use benefits. Choose a deductible you’d actually be able to pay after a major loss: higher deductibles mean lower premiums, but make sure you have enough saved just in case.
Timeline
Simple claims (short stays, clear damage) usually resolve in a few days to two weeks. Complex scenarios (major repairs, multiple units affected) may take several weeks or longer, depending on repairs and documentation. Most customers find the process straightforward when they report promptly and keep receipts. The key is prompt reporting—the sooner you file, the sooner you can get reimbursed.
What Loss of Use Coverage Actually Costs vs. What You Risk
Understanding the real financial impact: what you pay for coverage vs. what you risk without it.
Minor Water Damage Stay
Annual Coverage Cost: $30-60
Scenario: Pipe leak displaces you for five days—hotel cost $850, meals $225
Without Coverage: $1,075 out-of-pocket
With Coverage: $0 (besides deductible for repair)
Protection Value: $1,075 saved for a single event
Fire Outage—Rental Relocation
Annual Coverage Cost: $30-60
Scenario: Fire makes your townhome unlivable for three weeks—rental $2,700, extra commute $320, meals $700
Without Coverage: $3,720 out-of-pocket
With Coverage: $0 (besides deductible)
Protection Value: $3,720 for a single event
Major Storm—Extended Relocation
Annual Coverage Cost: $30-60
Scenario: Storm damage keeps you out of your home for six weeks—rental $5,100, pet boarding $630, storage $500, meals $1,100
Without Coverage: $7,330 out-of-pocket
With Coverage: $0 (besides deductible)
Protection Value: $7,330 for a major incident
The Economic Reality
For most people, loss of use coverage costs $3-5 per month—less than a latte. One incident could cost $1,000 to $7,500 or more, which could take months or years to recover from financially. The math is simple: loss of use coverage pays for itself, often in a single claim, and protects your financial stability after a disaster.
4 Costly Loss of Use Coverage Mistakes to Avoid
Learn from others' mistakes—avoid these common errors that can leave you unprotected when you need coverage most.
Assuming It’s Included Automatically
Some condo or townhome owners think loss of use coverage is standard on every policy. But coverage amounts and terms vary, and some budget policies exclude it altogether. Always check your coverage details and ensure loss of use is included at a realistic limit.
Setting Limits Too Low
Choosing a minimal limit to save on premiums can leave you short if you’re displaced for weeks, have a family, or need a rental rather than just hotel nights. Underestimating your needs means paying out of pocket after the coverage runs out. Work with your advisor to set a smart limit for your home and lifestyle.
Not Saving Receipts
Loss of use claims require proving your additional living expenses (rentals, laundry, meals, commutes, pet boarding). If you lose receipts, you might not get reimbursed for eligible costs. Keep all receipts organized and submit them promptly.
Not Understanding Exclusions
Loss of use kicks in only if the damage is from a covered peril (like fire, sudden water leaks—not normal wear or excluded disasters). Assuming you’re covered for anything can lead to costly surprises. Ask your advisor exactly what’s covered in your policy so you’re not caught off guard.
Find answers to your most pressing insurance questions right here.
Explore Your Coverage Options
Discover the best insurance coverage tailored to your individual needs and protect what matters most.