Home insurance policy covers more than simply third-party liability and physical damage to property. Home, condo and tenant insurance policies can also include coverage for additional living expenses. This helps you to pay for expenses encountered when you have to move out of your home while it undergoes repairs. It also helps when a community evacuation is ordered in case of a natural disaster of some kind.
These are the main elements of additional living expenses.
- -Additional living expenses helps pay for the cost of having to stay out of your home for a period of time. For example, hotel costs and food that you wouldn’t normally have to purchase if you were able to be in your own home.
- -Fair rental value pays for your loss of rental income if you had rented out a section of your home. The loss has made it such that your tenant can not return to live in their unit while repairs are underway.
- -Prohibited access helps pay for the costs involved if you have to leave your home for a period of time. This could be due to something that has happened to neighboring premises, or if the government orders an evacuation of the area (such as during a natural disaster).
Additional living expenses coverage helps cover the extra costs involved in allowing you to maintain the same standard of living while you must be out of your home. That is, anything over and above your normal expenses. It will not cover the normal expenses you would have had anyway. For example, if your temporary accommodations do not have laundry facilities. The extra expenses to use a laundromat is covered.
In other words, the additional living expenses coverage helps pay for those expenses that exceed your normal costs before the loss. Therefore, it is very important to track your expenses and keep receipts for when you make your claim.
These types of expenses can add up quickly. Here is an example.
Your home is damaged due to an internal water pipe break. This is covered by your policy. The damage is extensive to your main living area. It requires the removal of the damaged materials and drying the premises. It also requires replacing the damaged floors, walls and ceilings and then rebuilding the kitchen. The renovation is scheduled to take three months. You will be required to move out of the house until the renovation can be completed.
The initial stages include living in a hotel for a week or two until you find a suitable short term rental. Then moving to the rental until your house is ready to be lived in again. Your additional living expenses include hotel costs and short term rental fees. They also include food and transportation costs incurred which exceed your normal costs. For a family, these costs can quickly add up. This is particularly true when your damage is substantial and takes a long time to repair.