Having to leave your home can be tough even when you’re off on a fun vacation. Having to leave your home without knowing if it will be in one piece when you return is devastating.
Unfortunately, people must evacuate their homes due to flooding, wildfire and other disasters every year. This is why additional living expense coverage is a critical part of your home insurance.
Additional living expense coverage helps cover the additional expenses you incur when you’re forced from your home due to a mandatory evacuation or claim for an insured peril. This may just be for the period of an evacuation order (usually a few weeks) but can be for even longer if your home was damaged or destroyed.
Additional expenses are considered to be above and beyond the normal living expenses you must cover. This can include accommodation, transportation, food and more. It’s usually reimbursement but sometimes in a large emergency, insurance companies will release funds ahead of time.
For example, if you’re forced from your home due to wildfire risk, you will need to spend money on accommodation. You may also be unable to cook as your accommodation doesn’t have a kitchen, forcing you to eat out more. If you evacuated in a rush, you may also need additional clothing. All of these expenses could potentially be reimbursed (at least partially) by additional living expenses coverage.
Remember you must keep receipts! This is proof of what you spent and will need to be submitted to the insurance company for reimbursement. You should also keep a record of events and purchases, including what happened, when you made the purchase and why.
This coverage does have limits. The basic industry-standard limit of additional living expenses coverage is 20% of the value of the insured home. However, some insurers offer tiered coverage so you can opt for more or less protection. Some insurers offer a limited total amount or others offer a monthly allowance up to a total amount.
Talk to your broker for more information about additional living expenses and what your home insurance includes.