When disaster strikes and your home has been destroyed by fire, tornado, hurricane, or other natural event, the first question that you may have is, “Where is my family going to live.” The answer for those with homeowner’s insurance policies is: Living expense coverage or additional living expense.
What is Living Expense Coverage?
Most home insurance policies come with living expense coverage which means that if your home is destroyed by a natural or unavoidable event, then you can receive living expenses until your home is restored, repaired, or you find a new place to live. It should be noted that living expense coverage has certain applications and will not apply to paying the mortgage on your home or paying for standard expenses such as food, gasoline or other normal expenses.
What it does cover is living expenses for you and your family that are deemed not normal because your home was destroyed or not in a livable condition. For example, living expenses coverage would pay for hotel or rent payment for a temporary living situation while your home is being repaired, rebuilt, or if a new home purchase is required.
Keep in mind the coverage does not apply for those who are forced to evacuate their homes when they have yet to be damaged such as for a hurricane or wildfire. If you are forced from your home, you must pay for hotel expenses, boarding your pets, and other expenses from sources outside of living expense coverage.
How It Works
You can initiate living expense coverage by calling your insurance company right after your home has been damaged or destroyed. You will be guided how to file a claim through living expense coverage. While each insurance company has their own individual policies, most of them use the same means of determining if you qualify for the coverage.
The amount of coverage you receive will also vary depending on your insurance company, but many have a 20% rule which means that you will receive 1/5th the value of your home to cover additional living expenses. So, if your home is worth $500,000, you will receive up to $100,000 in coverage through the policy. You will also be covered up to 12 months after your home was lost or damaged. This means that you have one year to repair or find a new home to stay before the coverage runs out. You may find that there is no time limit stated on your policy, but most insurance companies place a limit of 12 to 24 months.