Many people are shocked at all the details that need to be dealt with in the aftermath of a disaster or covered event that happens to their home. Whether it’s a fire, tornado, or some other covered event that makes your home unlivable for a certain amount of time, you may discover that additional living expense coverage is your best friend.
That is, of course, if you have it. If you don’t, it could be your biggest insurance regret. But what is it and what does it mean to you?
Loss of Use or ALE and What it Means
Some covered events allow you to live in your home while repairs are being made. Others, though, make your home a nearly impossible place to live throughout the process as wiring must be replaced, water turned off, and certain areas of the home may be cut off from access until repairs or complete.
In some cases, the home is a total loss and you must begin the search for a new home or make moves to rebuild your existing property.
In either event, you must find somewhere to live until other arrangements can be made. Additional Living Expense coverage provides you with the means to find additional quarters during the time these repairs are being made – including rental deposits and fees, the costs of rental furniture, pet boarding, and moving expenses (depending on the particulars of your policy).
You will need to continue paying the mortgage on your home as normal, this coverage is only for the alternate living expenses created as a result of the covered damage.
Are there Limits to the Loss of Use Coverage?
Most insurance companies have a cap for this benefit that is a percentage of the value your home is insured for. This value is usually in the neighborhood of 20 percent of the value the home is insured to cover.
Additionally, this coverage only applies to covered losses for your home insurance policy. Since most people get flood insurance through the NFIP (national flood insurance program), additional living expenses related to flooding is not covered.
The best way to learn more about additional living expenses coverage is to discuss your options with a trusted independent insurance agent. He or she can tell you if your current coverage has you protected and what kind of protection you have. Policy terms can vary widely and you’ll want to feel confident that your needs are covered if the worst-case-scenario occurs for your family.