Additional Living Expense Insurance
Additional Living Expense Insurance is a type of coverage present on several types of Homeowner’s Insurance that reimburses additional costs caused because of the insured’s claim.
Let’s put it in a scenario so it’s easier to visualize:
Homeowner Sarah has her house trashed because of an Act of God: a hurricane has ravaged her city and the strong winds made a tree fall on her roof and the water damaged her whole kitchen and appliances. She first stayed at a hotel, while the insurance company was figuring out the extent of the damage. When they found out, one week later, that it would take 6 months to rebuild the house, she had to rent a house for her family to go to.
Both the cost of staying at a hotel and the rent of the temporary house are covered by the Additional Living Expense Insurance.
Like the name says, any additional living expense caused by whatever peril that damaged your house is covered by this type of insurance. For instance: if, because of it all, Sarah – who used to take her kids to school walking and spent zero dollars doing that – now needs to drive them there, the gas money is all covered by the additional living expense insurance. If she now spends $100 a month with it, on top of the $50 she used to spend, then she gets $100 from the company and still pays for that $50.
Additional Living Expenses insurance coverage usually provides from 10-20% of the structural coverage of the home and is basically a way of maintaining normalcy in an otherwise chaotic moment. It makes us confident that, should anything happen, it will all be fine and we won’t have to spend more than we used to.
Real Estate tips:
Use The OFFICIAL Real Estate Agent Directory® to connect with a real estate agent capable of guiding you through all types of Home Insurance policies!
Popular Insurance Terms
The term mutually exclusive defines an instance when the occurrence of a specific event makes the emergence of another event impossible. Then, two or more things can be described as ...
Endorsement to a fidelity bond or surety bond to cover losses that occurred after lapse of the discovery period of the previous bond. Coverage is limited to the amount provided by the ...
Endorsement to a property insurance policy providing all risks coverage for insured property. Excluded properties include residences, farms, and manufacturing properties. This endorsement ...
Approach in pension plan funding under which a separate account is maintained for comparing actual contributions to the plan with the minimum contributions required to meet future employee ...
Coverage in the event of property damage or destruction resulting from wrongful installation of equipment. ...
Report that an insurance company must file annually with the State Insurance Commissioner in each state in which it does business. The statement shows the current status of reserves, ...
Coverage for direct or indirect property loss that can be analyzed under the following headings: Peril a particular peril may be included or excluded. For example, the Standard Fire Policy ...
Amount of the insurance company's liabilities for claims that have not been settled. If this reserve increases significantly in relation to the company's surplus, the risk is greater for ...
Means of borrowing at no charge by a policyowner under universal life insurance policies. ...
Have a question or comment?
We're here to help.