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
Insurance company whose corporate charter and bylaws prevent assessment of its policyowners, regardless of how adverse its loss and expense experience may become. ...
Deductible that applies for the year. For example, a business pays for the first $40,000 of losses incurred during the year and the insurance company pays for all losses above that amount ...
Relationship of the frequency of deaths of individual members of a group to the entire group membership over a particular time period. ...
Technique of estate planning under which an estate is divided into two parts and taxed at a lower rate rather than remaining as a whole and taxed at a higher rate. This division may be ...
Rate not subsequently adjusted. The rate stays in effect regardless of an insured's subsequent loss record. ...
Expenses added to the beginning of a premium payment period. For example, an annuity with a 10% front load would include $10 of expenses for each $100 premium paid. ...
Relationship of incurred losses plus loss adjustment expense to earned premiums. ...
Method of classifying risks to establish equitable rates. In many property and liability insurance lines, the location of an insured has a significant impact on the loss experience. For ...
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 ...
Have a question or comment?
We're here to help.