Loss of Use: Why it’s an important part of your policy

Loss of Use is a type of coverage that’s commonly included in all home, tenant and condo insurance policies.

At its core, Loss of Use coverage is designed to help people who are suddenly unable to live in their home due to an insured event. For example, if you experience a fire, Loss of Use will cover your temporary living expenses while your home is being repaired or rebuilt.

You may also hear this coverage referred to as “Additional Living Expenses” (or ALE), but the distinction is that ALE is just one component of Loss of Use coverage.

Additional Living Expenses (ALE)

As described above, when an insured scenario makes your home unfit to live in, ALE takes care of the increase in necessary expenses you have to pay to temporarily relocate. This may include:

  - Alternative living accommodations
  - Food
  - Storage
  - Pet care
  - Gas / transportation
  - Moving costs

Your adjuster will help determine the best approach for you and any members of your household. The goal is to set you up with a temporary arrangement that reflects your current standard of living.

Fair Rental Value

This component of Loss of Use coverage protects you if you have a home that you rent to tenants. It covers your loss of rental income while you are no longer able to rent your home because of damage.

Prohibited Access

Prohibited Access is when you are required to evacuate your home, even though your property itself may not be directly affected by a loss. Perhaps there is insured damage to a close neighbour’s home that puts yours at risk, or a wildfire takes place in your area that requires the whole block to temporarily relocate. Prohibited Access coverage reimburses your additional living expenses while you are unable to live in your home as a result of the incident.

What isn’t covered by Loss of Use?

A helpful way to think about it is that Loss of Use – and more specifically, ALE – covers the additional costs you would not otherwise incur if you didn’t have to evacuate your home. You would continue to be responsible for costs that you were already paying before the loss took place. For example, you would still be obligated to pay your property tax, mortgage, or rent – even during your temporary relocation period.

Reach out to your broker with any questions. And if it’s been a while since you’ve chatted, this may also be a good opportunity to review your coverage with your broker and ensure your policy covers all of your current needs.