additional living expense coverage and homeowners insurance

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Suffering a catastrophic loss can be traumatic for any family. Not only do you have to the daunting task of replacing your home and possessions, but you also have the added stress of arranging accommodations and payment for temporary housing. Luckily, you don't have to face it alone.

what is additional living expense coverage?

If a covered event devastates your home, rendering it uninhabitable additional living expense (ALE) coverage within your homeowners policy may help pay for temporary housing and any increased food costs to maintain equivalent living standards. And the coverage limit for these additional expenses are usually stated in your home insurance policy. For example, ALE could help cover hotel or temporary housing expenses while your home is being repaired from fire damage.

It's important that you immediately inform your insurer when your home becomes uninhabitable due to a covered disaster. If your home is damaged by an event that isn't covered by your homeowners policy — such as flooding or an earthquake — your ALE coverage may not kick in. That's why it's always important to check and see what your home insurance covers.

what does additional living expense coverage pay for?

Think of ALE as coverage that helps maintain your normal standard of living after a costly incident. ALE will likely pay for the difference between your normal household expenses (before the incident) and new living expenses (after the incident).

Bear in mind that ALE will only pay reasonable living expenses while your home is being worked on. For instance, if you live in a 2-bedroom bungalow, then your insurance will probably not pay for a 6-bedroom house (nice try, though). ALE also typically doesn't cover bills like electric, gas, or water.

Here are some expenses your insurer may help cover:

  • Rent for temporary lodging
  • Fee for credit checks charged by management of the rental property
  • Laundry and dry cleaning
  • Restaurant meals
  • Furniture
  • Pet boarding
  • Storage space
  • Sewer fee if you didn't have one for your home
  • Mailing expenses related to your claim
  • Internet/utility/cable connection setup fees

Remember, most insurance companies reimburse you for expenses over time rather than paying a lump sum. For this reason, it's important that you are as meticulous as possible in saving receipts and recording expenditures — and it may be wise to store receipts in a zippered, waterproof pouch for safekeeping.

what makes a home uninhabitable?

While there really isn't a be-all-end-all legal definition for an uninhabitable home, it's safe to say that ugly wallpaper or shoddy carpeting doesn't count. But if, for instance, your home is reduced to rubble or all the bathrooms are completely damaged by a covered risk, then the conclusion is much more obvious.

And there are other circumstances that could technically render your home uninhabitable for which you may not be covered. If, say, the fire department orders an evacuation because of a fast-spreading wildfire in the area, or you have to flee your home in the midst of an advancing windstorm, your ALE coverage may not be able to put you up in a hotel as you wait for the disaster to pass. However, if those encroaching perils do end up ravaging your home, then your temporary living expenses would typically be covered.

What if I rent out part of my residence to a tenant?

If you rent a room or a portion of your residence out to a tenant, you can also purchase fair rental income coverage. You get the same amount of coverage in fair rental income protection as you would for ALE, which means you'll likely be reimbursed for the rental amount your tenant was paying.

get your free homeowners insurance quote from esurance

ALE coverage is to homeowners insurance as a life vest is to a sinking ship: while no one wants to imagine harrowing scenarios that can capsize a boat, it's no less wise to secure buoyancy in the event of turbulent waters.

With an Esurance policy, you can get the protection that matters most and tailor coverages around the unique needs of your home. Start by getting a fast, free homeowners insurance quote today.

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