Additional Living Expenses And Your Home Insurance

In: Finance

4 Jul 2013

When a home has gone through a major amount of damage that is insured such as water or fire, while repairs are being completed, you could have to stay in a rental or hotel for the time being. If you have “additional living expense” insurance, these extra living costs are normally covered by this. In this article, we will be going over some of the questions about additional living expense insurance that many policy holders may have.

How are the extra costs going to be paid?

For those who have wisely chosen to have additional living expense coverage included in their home insurance, as long as the damage was caused by an insured peril, the additional costs incurred will be covered by the policy.

The “insured peril” part of additional living expenses refers to what, in particular?

Some conditions apply and there are a few exclusions, but many home insurance policies include comprehensive protection that applies to damage or loss from theft, windstorms, smoke or fire damage, water damage, and other things as well. Floods and landslides for a couple of examples, are instances that are not insured perils.

When the damage that happens to your home makes it so that it can not be lived in, the insurance will pay your extra living costs, up to a the limit that the policy covers, as long as it is an insured peril.

So, “additional” expenses refer to what in particular?

While your home is being repaired, you will continue to be responsible for the regular ongoing expenses. This concerns expenses such as:

Mortgage payments;Insurance premiums; Transportation costs; and,Groceries.

“Additional” expenses are ones you wouldn’t normally have had, such as:

Hotel related costs, or a temporary home rental. Extra food costs. If there were no kitchen facilities in the hotel, you may have had to eat in a restaurant all week. The difference between your regular grocery costs and the restaurant bill will be covered by the insurance, not the entire bill.

Higher expenses for transportation. If you need to take public transportation or drive when you or your family regularly walks to school or work, this will cost you more.

What if part of the home was rented out?

When damage to the entire home is severe, the rental unit payments that the home owner was accustomed to receiving will not be part of their regular monthly income until repairs on the home are all finished. As mentioned above, you’re still responsible to pay for your mortgage, but now you’re missing that rent money you may have been counting on. Rental income insurance should be purchased if the landlord would like to be covered for this circumstance.

In the case of damage to a home business, what happens?

If you were running a business from your home, you may need to rent a studio or office space temporarily. When the business must be suspended, is the lost income covered? These are not covered by the additional living expenses, as they are actually business costs. Speak to your local insurance agent to get protection from situations like these. You may need to get a commercial insurance policy.

Suffering a major loss will always be stressful and traumatic. Much of the stress can be removed if the homeowner has the proper kind of home insurance coverage.

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