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Additional living expenses provide coverage for necessities should someone be unable to live in their home due to a variety of reasons. They are typically covered by insurance companies as a provision of a home insurance policy. Under such a provision, the cost of moving into another apartment or staying at a hotel can be paid for up front or reimbursed later on. Deposits for utilities, in addition to security deposits, are often covered, as well as income from someone who rents out part of a home. Generally covered for a specified amount of time, additional living expenses encompass a limited percentage of the total policy, and may also include the cost of eating out at restaurants.
Damage from storms, fires, theft, or an impact can make a house unlivable. The coverage will kick in only if the event that causes the damage is covered by the insurer. Estimates by contractors and construction companies are generally used to calculate the time span of the policy. Additional living expenses coverage is beneficial because homeowners will still have mortgage payments and other expenses associated with the house, in addition to repair costs. On top of these, the expenses of moving can exceed many household budgets, so extra assistance from an insurance company can be helpful.
Additional living expenses often consist of 10% to 20% of the total amount a home is covered for. More coverage can be requested, but most likely there will be a premium increase over the expenses of everything else. Regardless of how much coverage provided, the payment of additional living expenses stops when a home is repaired, or the person finds a new permanent place to live. In addition to physical damage, a homeowner may also be eligible for payments in case of an evacuation, or if damage to other structures prevents entry to the insured house.
Limitations of additional living expenses include payment for only reasonable needs. Most insurance companies won’t pay for the expenses of upscale hotels, for example, and expensive restaurants. Receipts from all expenses are usually requested by insurers. Reading the details of the policy at the start will ensure that it is known how much money is provided, and whether payments are made at the start of the policy or after the provision ends. By assessing the content of the policy, homeowners will also know exactly what is covered and what to expect as time goes by.
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