What is additional living expense coverage?

Last updated: January 1

Additional living expense coverage is a standard part of most homeowners, condo and renters insurance policies. It helps pay for increased costs you incur if you are temporarily unable to live in your home due to a covered loss.

Suppose, for example, a fire or windstorm leaves your home uninhabitable, and you have to relocate for a few months while it is repaired. Additional living expense coverage may help pay for costs that exceed your typical expenses, such as hotel bills or restaurant meals, while you're unable to live in your home, according to the Insurance Information Institute (III).

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What does additional living expense cover?

Additional living expense coverage may kick in if your home is damaged by a peril listed in your insurance policy.

Commonly covered perils include damage caused by:

  • Fire and smoke
  • Windstorms
  • Explosions
  • Falling Objects
  • Vandalism
  • Water damage from a burst pipe
  • Weight of snow, ice or sleet

The coverage may help reimburse you for increased living expenses such as:

  • Hotel or temporary rental fees
  • Restaurant bills
  • Boarding costs for a pet

How much coverage is provided?

The coverage comes with a limit, which is the maximum dollar amount your policy will pay for increased living expenses after a covered loss. You'll likely find that your policy comes with a certain amount of additional living expense coverage. The amount is typically based on a percentage of another coverage limit on your policy. For instance, if you have a homeowners insurance policy, your additional living expense limit may be a percentage of your dwelling coverage limit, the International Risk Management Institute explains.

You'll probably also find that additional living expense coverage provides protection for a limited period of time, the III says.

Read your policy to learn what types of situations may be covered and how much coverage your policy provides for additional living expenses. Your agent can inform you of any options for increasing your coverage.

What's not covered?

Additional living expense coverage does not pay for damage to your home or belongings. Other coverages in your policy typically help protect against those types of losses.

The dwelling coverage in a homeowners insurance policy, for example, may help pay to repair physical damage to your home caused by a covered peril, like a fire or windstorm. Personal property coverage, which is a standard part of most homeowners, condo and renters insurance policies, may help pay to repair or replace belongings damaged by a covered peril.

No one expects to be displaced from their home. But understanding your additional living expense coverage is a start toward being prepared for a difficult situation. Have questions about additional living expense coverage?