Additional Living Expense Insurance

Definition of "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! 

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Insurance Terms

Factors on the application that must be evaluated in order to complete the underwriting process: age; sex; physical condition; personal health history; family health history; financial ...

Coverage on an all risks basis for the insured's own property as well as property of others under the insured firm's care, custody, and control. Exclusions are wear and tear, mysterious ...

Life insurance contract that pays its owner dividends, which can be: taken as cash; applied to reduce a premium; applied to purchase an increment of paid-up insurance; left on deposit ...

Policy designed to act as a supplement to Medicare. The supplementation is in the form of additional benefits to that provided by Medicare. The additional benefits are in the form of ...

Amount expressed as a liability on the insurance company's balance sheet for benefits owed to policy owners. These reserves must be maintained according to strict actuarial formulas as they ...

Optional provision in a disability income policy that allows the policyowner to increase the monthly income sum at an approximate rate of 6%. ...

Same as term Floater: coverage for property which moves from location to location either on a scheduled or unscheduled basis. If the floater covers scheduled property, coverage is listed ...

Group insurance contract under which a periodic (usually monthly) disability income benefit is paid to the insured as long as he or she remains disabled. ...

Partnership in which family members hold all interest in the partnership. This partnership is treated as a cash flow through stand-alone entity. All sums of income and credits, as well as ...

Popular Insurance Questions