Home insurance coverage: Additional living expenses

Additional living expense coverage will cover any additional costs if you and your family are forced to leave your home temporarily due to an insured loss, or if you are unable to access your home because of a government evacuation order or sometimes due to damage to a neighbouring property.

This coverage is usually limited to a maximum of 20 – 30% of the replacement value of the home, as listed in the policy, or 12 months. It’s meant to pay for comparable accommodations to what you are used to, so it likely won’t cover a five-star hotel or meals at a five-star restaurant.

If you need to leave your home due to an insured loss or evacuation order, your additional living expense coverage will typically reimburse you the cost of a short-term rental or hotel accommodations, plus meals, laundry, and possibly even pet boarding, furniture storage and mileage put on your vehicle.

It’s very important to note that the coverage is for “additional” expenses, so if you usually spend $1,500 a month for food (groceries), and it costs $3,200 while you are displaced because you need to order in, , you will be reimbursed $3,200 minus the $1,500you would have spent if you were at home. The same applies to mileage. You will only be reimbursed for mileage if your relocation requires you to drive more than you normally would.

There will be an overall dollar limit in your policy that is usually 20-30% of the rebuild value of your home. That could be as much as $150,000, but the insurance company will expect you to be as economical as you can.

So if you’re out of your home for three weeks, you may be able to claim a hotel room for that time, but if you’re out for six months, you’ll have to arrange a short-term rental to keep costs down.

Likewise with food. Insurance may pay for restaurant meals for a short time, but beyond a few weeks, you’ll have to find a way to prepare meals like you would at home.

When you start your claim, you can speak to your adjuster about what housing options are available to you, how long you’re likely to be out of your home, and what your costs are likely to be.

Yes. They are two names for the same thing. Typically called additional living expenses coverage in Canada, this helps homeowners cover additional expenses if they are forced to live away from their home while repairs are underway after an insured loss.

Fair rental value is a coverage that may be included in your home insurance policy under the same section as additional living expenses. Fair rental value coverage reimburses you for lost rental income if your home suffers an insured loss that forces your tenants out.

Note that fair rental value is not a standard coverage, and will only be included if you let your broker know that you rent out a portion of your home. When it comes time to make a claim, you may need proof that you were renting out all or part of the property at the time of the loss.