What is additional living expenses coverage?
Many people buy homeowners or renters insurance to protect themselves financially from disasters. The policy includes a number of coverage options. Additional living expense coverage or loss of use is one valuable coverage that your home policy may include. This coverage assists in covering costs when your home is deemed uninhabitable while repairs are being made following a covered loss.
Many homeowners, condo owners, and renters insurance policies automatically include additional living expenses coverage, but not all. The StrongInsurance editorial team conducted research to help you navigate additional living expenses coverage, whether it's included in your policy or not.
What are additional living expenses?
Additional living expenses coverage pays for costs incurred as a result of being displaced from your home following a covered loss. If a natural disaster, such as a tornado, or other claimable event forces you to seek alternative accommodations, additional living expense coverage may pay for:
- Food costs more than you normally pay.
- Laundry expenses
- Pet boarding
- Temporary rental accommodations
- Hotel stays
- Additional fuel costs
- Rental car and other transportation costs
- Storage fees
- Moving costs
Coverage limits and details under additional living expenses can differ depending on the carrier. To find out what coverage you have for loss of use, contact your insurance agent or read your homeowners policy.
What is covered by additional living expenses?
Although coverage details for additional living expenses vary by carrier, extra food, transportation, housing, and utility costs are almost always covered.
Current costs such as childcare, insurance, mortgage, food, and utilities that you are already responsible for are usually not covered. The overage, or excess, fees are the key to determining what is covered. For example, if you are staying in a hotel for a short period of time, you may incur additional laundry or food costs because you do not have access to a washer, dryer, or kitchen. If you normally spend $100 on gas but your temporary housing is further away from your job and you now have to pay $200, you may be eligible for reimbursement for the extra $100 in transportation costs.
Claimants should keep detailed records, including mileage and transaction receipts, in order to submit a claim for reimbursement. Continue to pay your regular bills, such as your mortgage or rent, and utilities. These costs are not included. Additional living expense coverage will apply only if your home is rendered uninhabitable due to a covered peril.
How much additional living expenses coverage should you have?
Typically, additional living expenses coverage defaults to a percentage of your dwelling coverage, typically 20 to 30 percent, which means you do not have to choose your coverage amount. If necessary, you may be able to increase the amount of coverage or select a level known as "actual loss sustained." This means that the coverage has no monetary limit and that the insurance company agrees to pay all reasonable expenses.
Some financial experts advise purchasing as much additional living expenses coverage as you can afford, because you never know what type of disaster will strike you or how long you will be displaced. Other insurance professionals advise you to keep track of the costs for hotels, rentals, restaurant meals, and other potential expenses and calculate how much money you will need for 30 to 60 days of displacement.