Alice Yao - AYAO Insurance
12700 NE 124th St #9, Kirkland, WA 98034
Just like its name, additional living expense coverage, also commonly known as loss of use, provides reimbursement to cover extra living costs in the events that your home is not livable due to fire or other covered perils.
This coverage is one of the six main components of homeowners insurance policy and provides essential benefits to homeowners for unexpected costs such as hotel stays and extra cost of meals.
In the event that a covered loss occurred, this coverage will take care of the following list of additional costs that are above your normal daily expenses:
If part of your home was rented out prior to a covered loss, you may be reimbursed as part of your standard homeowners policy. Additional living expense coverage will typically cover up to 12 months of rental income loss.
Note: Some companies may require you to add a specific endorsement onto your homeowners policy in order to include this benefit.
On most property insurance policies, the specified time period of coverage is 24 months.
To find out your specific coverage limit, we recommend consulting your insurance agent for more information or look through the policy declaration page that is included in your homeowners, condo, or renters insurance.
It is important to review the coverage amount to account for fluctuation in costs of living within your area. If you live in an area where housing costs and dining options are rather expensive, it may be wise to consider a higher coverage limit.
Having adequate additional living expense coverage will ensure that your coverage will not run out before your home is repaired or rebuilt.
Some insurance policies may also include a specified time period limit for this coverage. Under these policies, the coverage amount limit still applies, but if the repair or reconstruction of your home is not completed before expiration of the time period limit, you would become responsible for any additional living expenses from that point forward.
Once you have met the deductible amount, you should be reimbursed at the fully approved amount by your claim adjuster.
You would not have to pay additional deductible each time when you apply for the reimbursement.
On some policies, a predetermined fixed daily limit is specified to cover daily expenses. On other policies, there is no specified daily limit, but rather a specified period of time.
When there is no total coverage limit or daily limit specified on the policy, an assigned claim adjuster will review each case at the time of a loss and approve additional living expenses based on what is considered reasonable in each case.
In the process of establishing reasonable expenses in the approval of reimbursements, insurance companies will consider factors such as:
Your claim adjuster will take into consideration of convenience when reviewing and approving requests especially when it comes to temporary housing. If there are two similar hotels nearby, the adjuster is likely to approve the one that is closer to your home even if it is more expensive.
By the same token, if you were planning to stay at the Four Seasons Hotel that is 10 miles away from your home compared to the Hilton Garden Inn that is only a mile away, there is a good chance that the adjuster will only approve a portion of the cost that is comparable to cost of Hilton Garden Inn.
Other expenses that are deemed excessive such as eating out at fine dining restaurants may also have a tough time getting fully reimbursed.
Keep in mind that your additional living expense coverage is designed to cover extra cost that incurred because of a covered loss, and your claim adjuster will likely request to see meal receipts and room service invoices to evaluate whether the accommodation is reasonable.
It is always a good idea to log all expenses, no matter how small the amount is.
In our experience, the easiest way to track expenses is to take pictures of receipts using your phone. You may also consider writing down some reference notes for these expenses using a simple notes app found in your phone.
Another common expense covered by additional living expense coverage is the extra mileage or transportation expense. If your home requires a few months of construction repair work, your family may move farther away into a rental home and incurred additional traveling costs.
After a sewer backup, waste water flooded the basement of our customer’s home. It was discovered very quickly because of the smell and we were able to start the claim process right away and arranged for a restoration company to the customer’s home.
A team of specialists arrived with shop vacuums and commercial fans to remove water and dry out any moisture left in the basement.
During this time, not only was the noise level very high in the customer's home, but the smell was unbearable.
Fortunately, the claim adjuster on this case quickly approved an immediate hotel accommodation, and our customer and his family were able to move forward with their daily activities.
Every insurance company has its own guidelines for policies. We always recommend talking to your insurance agent to discuss your personal policies in detail. Working with an insurance agent is the best way to make sure you are properly covered.