Does homeowners insurance cover additional living expenses if I cannot stay in my home?

When a covered loss forces you out of your home during repairs, most standard homeowners policies include a provision called additional living expense coverage, sometimes referred to as loss of use coverage. This coverage is designed to bridge the gap between your normal living costs and the higher costs you incur while displaced from your home.

Additional living expense coverage typically covers hotel or rental housing costs, restaurant meals if you no longer have access to a kitchen, laundry expenses, storage fees for personal property, and similar reasonable costs that are above and beyond what you would normally spend. The key concept is the increase in cost. If you ordinarily spend $800 per month on groceries and cooking at home but now spend $1,400 eating out while displaced, the roughly $600 difference is the type of expense this coverage is meant to address.

Policies usually cap additional living expense coverage in one of two ways: either as a percentage of the dwelling coverage limit (commonly 20 to 30 percent) or as a fixed dollar amount. There is also typically a time limit, often 12 to 24 months, depending on the policy and carrier. Once you reach either the dollar cap or the time limit, payments stop even if repairs are ongoing.

To qualify, the reason you cannot stay in your home must be caused by a covered peril. If your home is uninhabitable due to a flood and you do not have flood insurance, standard homeowners additional living expense coverage would not apply to that event.

Keep all receipts and document your temporary expenses carefully from the day you are displaced. Carriers generally require itemized records to process reimbursement, and good documentation speeds up the process considerably.