When Does Additional Living Expenses Coverage Kick In?

Tue Sep 7 2021

parents lacing up their children's shoes by the front door of a home

Additional living expenses coverage, sometimes called loss of use coverage, is offered under Coverage D in your home insurance policy. It can help pay for out-of-pocket costs like a hotel, excess transportation, and more when you can’t live at home because of a covered claim.

But when exactly does that coverage kick in? Does your home have to be totally destroyed for your insurance company to pay for additional living expenses? What if an event in your neighborhood forces a mandatory evacuation? Let’s look at a few additional living expenses examples to get a better idea of how this coverage works.

Additional Living Expenses Examples

Coverage D typically only kicks in when your home is made uninhabitable by a covered peril that’s covered by your home insurance policy. That said, there are numerous examples of when you might tap into your additional living expenses coverage, including when:

  • You need to find temporary lodging during a claim: Let’s say a kitchen fire gets out of control. As a result, your home is unsafe to live in. Most insurance companies would cover the additional living expense of temporary housing.
  • You’re unable to use part of your home: Now imagine that kitchen fire only requires your kitchen to be gutted and rebuilt. You can stay in the house, but you can’t cook there until the kitchen is redone. In this case, you may be able to file a claim to cover the costs of eating out.
  • Civil authority requires you to evacuate due to a cause of loss covered under your policy: Additional living expenses are sometimes triggered if a civil authority like the police or emergency management service prohibits you from staying in your home. This is only available if neighboring properties suffer direct physical damage that is covered under your policy and that is the reason the civil authority is prohibiting you from returning home.

Additional living expense coverage often depends on how your insurer defines “uninhabitable.” Conditions of coverage may also vary. For example, if the insurer finds temporary housing that has a kitchen, then dining out is often not a covered expense. So be sure to ask your insurance provider for some additional living expenses examples for your coverage.

What Can I Use Additional Living Expenses For?

A claim that causes you to have to move out of your home can be stressful, and racking up unexpected expenses can add to the overwhelm. The good news is that loss of use protection is designed to take some of that worry off your plate.

Additional living expense coverage can potentially pay for:

  • Temporary accommodations, such as a hotel, Airbnb, or apartment.
  • Extra transportation costs.
  • Pet boarding if necessary.
  • Reasonable restaurant bills if you are unable to cook.
  • Relocation and storage of personal belongings.
  • Laundry expenses.
  • Parking fees.

Additional expense coverage also includes fair rental value coverage that’s important to know if you rent out a portion of your home. Fair rental value coverage can reimburse you for lost rent if a covered claim makes the rental portion of your home uninhabitable.

How Long Do Additional Expenses Last?

Every insurance policy is different, but most HO3 policies state that additional living expense payments are paid only for the shortest time required to repair damage or for you to relocate if relocation is necessary – usually about 12 months. Homeowners who rent out space in their homes get just two weeks of rent replacement if there’s a mandatory evacuation as explained above. Additionally, policies have a limit to the amount of money available for additional use expenses.

Filing an Additional Expenses Claim

Your insurance company doesn’t simply write you a check for your additional expenses. In fact, insurers only reimburse you for the money you spend above and beyond your normal living expenses. This means you need to document all of your costs by providing rental agreements, gas receipts, restaurant receipts, and any other bill you incur while you’re unable to live in your home. Your claims representative may provide a worksheet to categorize and track your expenses.

Keep in mind that the additional living expenses won’t cover all costs while you are displaced – only additional costs. It won’t pay for your mortgage, your regular grocery bill or your kids’ tennis lessons. Those are your normal budgeted expenses and still your responsibility while displaced.

Plus, your insurance company may deduct money you save while you’re not in your home. For example, say your utility bills are lower at your temporary residence than what you normally pay. Your insurer may subtract that savings from your additional expenses payment.

Most importantly, remember that additional expenses generally only kick in for covered disasters that make your home unlivable. If you’re unsure about what triggers your coverage, be sure to, talk to your insurance provider.

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