Most renters insurance policies do not cover temporary housing costs after a loss
Standard renters insurance covers your belongings and liability, but temporary housing — also called loss of use — is not included in basic policies. If a fire, theft, or other covered event makes your apartment unlivable, you will need to pay for a hotel, motel, or other temporary shelter out of your own pocket unless you purchased an add-on called loss of use coverage.
Loss of use is optional and costs extra. It reimburses you for the reasonable cost of temporary housing while your apartment is being repaired or rebuilt. The amount varies by policy and by insurer, and it has limits — typically between $500 and $2,500 per month, though some policies offer higher limits. You have to purchase it before the loss happens; you cannot add it after your apartment becomes uninhabitable.
Key Takeaways
- Standard renters insurance does not cover temporary housing; you must add loss of use coverage as an optional rider to your policy.
- Loss of use reimburses you for hotel, motel, or other temporary shelter costs while your apartment is repaired, up to the monthly limit you chose.
- Monthly limits typically range from $500 to $2,500, and you choose the limit when you buy the coverage.
- Loss of use only pays for temporary housing after a covered event — fire, theft, vandalism, or other perils listed in your policy — not for voluntary moves or temporary absences.
- You must purchase loss of use before the loss occurs; adding it after your apartment becomes uninhabitable will not work.
How loss of use coverage works in practice
When a covered event damages your apartment and makes it unsafe or unlivable, you move to temporary housing and keep your receipts. After the damage is repaired or the police clear the scene, you submit those receipts to your insurer along with a claim. The insurer reimburses you up to your monthly limit for the period between when you left and when you could return.
The key word is reasonable. An insurer will not reimburse you for a luxury hotel if a modest motel would have been appropriate for your area and situation. They will also not pay for temporary housing that extends beyond the time needed for repairs. If your apartment can be repaired in two weeks but you stay in a hotel for a month, you will only be reimbursed for the two weeks.
Some policies also cover the cost of moving your belongings into storage and back out again, as part of the loss of use benefit. Check your policy documents to see whether storage is included or whether you need a separate rider.
What events trigger loss of use coverage
Loss of use only pays when a covered peril makes your apartment uninhabitable. Covered perils typically include fire, lightning, theft, vandalism, windstorm, hail, and explosion. They do not include flood or earthquake — those require separate policies — and they do not include wear and tear, pest infestations, or mold (unless the mold resulted from a covered event like a pipe burst).
The specific perils covered depend on your policy. A basic policy covers fewer perils than a comprehensive one. Before you buy loss of use coverage, read the list of covered perils in your policy documents so you know what events will trigger reimbursement.
Loss of use does not cover temporary housing for voluntary reasons — moving for a job, taking a vacation, or staying elsewhere while your apartment is being painted. It only covers housing you need because a covered event made your apartment uninhabitable.
How much loss of use coverage costs and how to choose a limit
Loss of use is inexpensive compared to other renters insurance riders. Adding $1,000 per month of loss of use coverage typically costs $5 to $15 per year, depending on your insurer and location. Higher limits cost more, but the difference is usually small — $2,500 per month might cost only $10 to $25 per year.
To choose a limit, think about what temporary housing would cost in your area. Look up the nightly rate for a modest hotel or motel near your apartment, multiply by 30, and that is roughly your monthly cost. If a hotel room costs $80 per night, your monthly cost would be around $2,400. A $2,500 monthly limit would cover most of that; a $1,500 limit would leave you short.
You can also consider how long repairs typically take in your area. If your apartment is in an older building where repairs might take two months, a higher limit protects you better than if you live in a newer building where repairs are usually quick. The cost is low enough that most renters benefit from choosing a limit that covers at least one full month of local hotel rates.
When loss of use coverage has limits and exclusions
Loss of use coverage has a time limit. Most policies cover temporary housing for 12 to 24 months after the loss, but some cover only 6 months. If your apartment requires extensive repairs that take longer than your policy's time limit, you will stop receiving reimbursement even if repairs are still ongoing. Check your policy to see what time limit applies.
The coverage also does not apply if you choose to stay with family or friends instead of paying for temporary housing. You can only claim reimbursement for actual out-of-pocket costs — hotel bills, motel receipts, or rent for a temporary apartment. If you stay with your parents for free, there is nothing to reimburse.
Some policies exclude certain types of temporary housing. For example, an insurer might reimburse hotel costs but not the cost of renting a temporary apartment. Read your policy documents or call your insurer to confirm what types of housing are covered before you book.
How to add loss of use coverage to your policy
Contact your renters insurance company and ask to add a loss of use rider or additional living expenses rider — different insurers use different names for the same coverage. You will choose a monthly limit, and the insurer will add it to your policy and adjust your premium.
The change usually takes effect immediately, though some insurers have a waiting period of a few days. Once it is active, you are covered for any loss that occurs after that date. If you already have renters insurance and want to add loss of use, you do not need to switch insurers — most companies allow you to add riders to an existing policy.
If you are shopping for a new renters insurance policy, ask each insurer what loss of use coverage costs and what limits are available. Some insurers offer it as a standard part of their comprehensive policies, while others charge extra. Comparing quotes that include loss of use will help you find the best price.
Frequently Asked Questions
If my apartment is damaged and I move to a hotel, will my renters insurance pay for it?
Only if you purchased loss of use coverage before the damage occurred. Standard renters insurance does not include temporary housing. If you have loss of use, the insurer will reimburse you for hotel costs up to your monthly limit, provided the damage was caused by a covered peril like fire or theft.
What if I stay with family instead of paying for a hotel?
Loss of use only reimburses actual out-of-pocket costs. If you stay with family for free, there is no bill to submit and nothing to claim. You can only claim reimbursement if you pay for temporary housing yourself.
How long does the insurer pay for temporary housing?
Most policies cover temporary housing for 12 to 24 months after the loss, but some cover only 6 months. The insurer also stops paying once your apartment is repaired and ready to move back into, even if that happens before your policy's time limit expires. Check your policy documents for the exact time limit.
Can I add loss of use coverage after my apartment is damaged?
No. Loss of use coverage must be purchased before the loss occurs. If your apartment is already damaged or uninhabitable, you cannot add the coverage and claim reimbursement for temporary housing costs.
Does loss of use coverage pay for moving and storage costs?
Some policies include moving and storage as part of loss of use coverage, but not all. Check your policy documents or call your insurer to confirm whether these costs are covered under your loss of use rider.