insuranceLiving Expense Coverage For Home Insurance
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living expense coverage after disaster

living expense coverage for home insurance

Picture this scenario: people are out into the street after a sudden disaster, may it be a fire in their apartment building if they rent, or massive property damage from hails or other disasters for home or condo owners.

They are pulled out from their dwelling. The question, what happens next?

When you have a home, a condo, or tenant insurance, Additional Living Expense (ALE) coverage saves you from being "homeless" while waiting for repairs to be done. Here's how it works and how to obtain this coverage.

What Is Additional Living Expenses (ALE) Coverage?

You have a home insurance policy, yes, but do you know that it can give you added protection aside from physical damage to your assets and liability claims? Additional living expense coverage is a coverage that may come along with your homeowner, condo owner or tenant insurance policies. The coverage provides compensation when you've been displaced from your dwelling due to insured disaster while waiting for your home to be fully repaired. This coverage may come in variable names, but the purpose remains the same: to help reimburse your additional costs of living elsewhere when for a time, you need to leave your home for any insured disaster or event. It will pay until your home is ready for occupancy again or until an additional living expense (ALE) policy limit is reached.

How Does It Help You?

Aside from the actual financial assistance this coverage provides, the policy allows you to maintain your privacy in your temporary dwelling. It can relieve you from stress while processing your claims, and you can have a measure of peace of mind because there's an entity you can lean on and will help you while recovering from a sudden and major disaster.

The three main elements of Additional Living Expense coverage are as follows: 

  1. Additional living expenses: Reasonable expenses like food or home rental charges, including other additional costs, are covered in this policy.
  2. Fair rental value: If you own an apartment or rented out some rooms in your home before the disaster and it is still unsafe for your tenants to occupy, and at the same time, repairs are currently being done, your policy could remunerate for your income loss until your property is restored.
  3. Restricted access: The policy will cover additional living expenses if you're forced to vacate your home due to some emergencies like when the government orders a mass evacuation notice during a natural calamity, for instance.

What isn't covered under Additional Living Expenses?

Additional living expenses coverage helps you maintain a reasonable living standard by offering to cover costs you don't usually face - but it does not place you in a better situation than you were in just before your loss. It won't pay for your regular living expenses. For instance, if you're forced to transfer residency in the meantime, and there's no kitchen in your temporary residence, the extra cost of eating out in a restaurant would be covered. If your temporary residency has a kitchen, but you are used to eating outside, your policy will not cover it. Neither will it cover grocery items since these are regular living expenses.

There are variations in particular coverages by providers. Contact your licensed home insurance broker to know more about the coverage and how it could help you out in an emergency.

When Can You Claim Additional Living Expense ?

You can claim additional living expense only if your home becomes not suitable for occupancy after a loss or disaster has caused risk and is still part of the coverage of your insurance policy. Understandably, home repair makes it very inconvenient for the family at a loss. The other option is to go to a hotel. The only downside is that you can not automatically assume that your policy will cover it. The insurance company where you bought your coverage has to approve first your decision to move out of your house, and the reasons have to be under the claim circumstances. For instance, one criterion they could consider might be when there's no running, potable water, and electricity. These are examples of cases that may render a home not occupiable. Maybe you had your sewer repaired, and you had repairs done for a week, but it may not qualify for the coverage. There are also cases where a client had their roof repaired after a storm. But since the damage didn't affect their living room so much and they still had electricity, water and heat, their ALE claim was not approved. Always inquire before incurring expenses. Insurance companies will have to assess the claim circumstances and will let you know if they can grant coverage with your situation.

Reimbursed Amount For Additional Living Expense

It's just easy to assume things will come out in our favour when we want to claim ALE. So the last thing we like to do is to spend all kinds of extra funds we have, only to find that we're just going to be paid half of what we already spent.

The good news? Most insurance companies have tremendous resources and extensive networks to help you find a temporary home or rental space with conditions pretty close to your previous abode. Ask the adjuster for the provision of options to choose from that meet your additional living expense's limits. He's the right person to ask how long the coverage will pay for the additional living expenses. In most circumstances, ALE has a limit. So verifying with your adjuster about the length of time you can expect to be covered in the meantime will be a smart idea.

How to Get Your Maximum Benefits Paid

  1. Provide receipts for all your living expenses.
  2. Record how your present fees differ from your normal expenses, especially if there's an increase.
  3. You may prove your regular expenses before versus your current expenses to give ample proof to the insurance company about a change or growth in your expenses.
  4. Acquire written authorization from your insurance company for any special expenses you may have to avoid misinterpretations.

There's nothing wrong with trying to make the best out of a difficult situation and try to enjoy yourself. But it's imperative to know what you will be getting back. When feelings of doubt cloud your judgment, always refer to your insurance broker on how things will be covered to avoid paying all unnecessary additional living expenses.

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