In the second series of Home Insurance 101 we are breaking down all the elements of Additional Living Expenses that you need to know about.
Additional living expenses accounts for the coverage of alternative living arrangements you may have to make if your home experiences a significant loss. If there is a severe fire or flood that forces you and your family to move out of your home while repairs are made, you will need to find alternative accommodations. Many people either spend this time at a hotel or rental home, depending on the size of their family and their lifestyle.
The problem that many policyholders run into with their ALE policy is the amount of time that the cost of living is covered for. Unfortunately, in this industry, timelines can be extended drastically based on the insurance process as well as things like demo, permits, by-law restrictions etc.. When rebuilding or restoring a home, there are many different factors that contribute to the overall timeline.
If your coverage only permits you nine months of covered alternative living expenses, but your homes restoration takes a year and a half, that cost of living after the nine months is coming directly out of your pocket.
It is a stressful situation to be in when your home is undergoing repairs or a rebuild and you have to pay for a place to live. In addition to paying for temporary housing, you are also responsible for your mortgage payment and additional home and property expenses. Because of the potential high cost of this situation, ALE is one of the most important sections of your home insurance to understand.
In relation to the previous topic in this series, content coverage could also affect your ALE. In some policies, the amount of content coverage you have can directly influence the amount of additional living expenses you are allotted. This is another reason that you must thoroughly comprehend these two elements of your home insurance policy. It is important to discuss the options of ALE with your broker or agent to ensure you aware of how much you and your family are covered for additional living expenses.