Sometimes bad things happen, and when they do they can severely damage your home to the point of making it uninhabitable. When this is the case, additional living expenses coverage can help. Here’s how it works.
What Is Additional Living Expenses Coverage?
Additional living expenses coverage is often a standard part of renters, condo, and homeowners’ insurance policies. It covers additional costs that come with relocating yourself and your family while your home gets repaired after it’s deemed inhabitable due to a disaster.
So, say there was a hurricane, and it destroyed the roof of your house; this caused water damage to kick in, and the electricity to go out. In this case, your home would most likely be declared inhabitable, and your additional living expenses coverage would take over.
What Does Additional Living Expenses Insurance Cover?
Additional living expenses coverage can pay for things like hotels, restaurant meals, mileage, and laundry. A good way to think of it is that it should cover any expense you would not have if you had not moved out of your home.
For example, you’re staying in a hotel because of the hurricane. Your room does not have a kitchen, which means that your expenditure on restaurant meals went up. And not only that, but the hotel is farther away from your job, causing your car mileage and gas expenses to go up as well. Since these expenses would not exist had you not moved out of home, this is something that the insurance could cover.
However, it only covers the additional costs that you’re incurring. If your usual rent is $1,600 a month, but your new rent is $1,900, the insurance would pay for the $300 difference, not the full cost of your rent.
Other costs that could be covered by the policy include:
- furniture rental
- storage fees
- pet boarding
What Are the Limits of Additional Living Expenses Coverage?
Usually, additional living expenses coverage is around 20% to 30% of your dwelling limit amount. So, if your home is insured for $200,000, 20% of that would be $40,000—this is your policy coverage. Not only that, but these policies also have a time limit, which is usually around 12 months.
In addition to these things, your insurance company will not pay for anything they consider to be overboard. These policies were made to help you maintain your lifestyle, not improve it. If you have a three-bedroom house, a temporary move to a six-bedroom house with a pool is something that your insurance will not cover.
Your insurance company can help you look for something of similar condition to your home. It will make the process less complicated for you and ensure that it falls under their coverage rules.
Best Practices with Additional Living Expenses Coverage
The best thing to do when using your additional living expenses coverage is to document everything. Save, scan, and send any receipt from your usual living expenses to your insurance agent. At the same time, document and send any costs related to your relocation; this will help them compare the costs of your lifestyle to your current conditions and identify the differences.