Disaster recovery: Standard home and renter’s insurance policies cover additional living expenses
There’s a bit of good news amid the many natural disasters affecting millions of Americans: If you have to evacuate because of a hurricane or a wildfire, standard homeowner’s insurance and renter’s insurance policies cover the costs of living away from home.
The “additional living expenses” portion of your policy pays the extra costs of living away from home if your house or apartment has been affected by a storm, a fire or another insured disaster. Note: Standard homeowner’s and renter’s insurance policies don’t cover flood damage.
“Evacuating your home … is terrifying,” California Insurance Commissioner Dave Jones says. “But knowing you’re adequately covered for those unexpected expenses after such a disaster may lessen the anxiety just a little.”
Keep in mind that the expense coverage has limits — typically a percentage, oftentimes 20 percent, of the amount of total coverage you have on your home. For example, if the home coverage is $500,000 and the limit is 20 percent, the additional-living-expenses overage would be $100,000. Some policies include a time limit for receiving expense reimbursement.
Generally, this type of coverage pays for the increase in living expenses needed to maintain a “normal standard of living.” In other words, don’t expect your insurance to fork over money for a glamorous condo in a high-rise in the big city if you live in a modest one-story home in the suburbs.
Policyholders should keep all receipts for lodging, meals and other extra expenses to make the claims process easier. Some insurers will provide additional-living-expenses money immediately after being notified of your loss; others may reimburse policyholders later.
Additional-living-expenses coverage is separate from the amount available to rebuild or repair your home.
Some of the expenses that are likely to be covered if you’re forced by a natural disaster to live away from home include:
• Temporary housing, such as a hotel or a corporate apartment.
• Restaurant meals.
• A credit-check fee charged by a management company when renting temporary housing.
• Mileage for the increased travel distance from temporary housing to your workplace.
• Costs for moving from temporary housing back to your repaired or rebuilt home.
• Reconnection fees for setting up services such as cable TV and electricity at your repaired or rebuilt home.
Sources: American Insurance Association, Brownstone Agency Inc., California Department of Insurance, Insurance Information Institute, United Policyholders.