Additional Living Expenses (in the midst of a natural disaster)
Additional Living Expenses, sometimes referred to “ALE,” “Loss of Use.,” or Coverage D is a coverage under most homeowners insurance policies that affords compensation in the event of a loss when an insured location, or a part of that location, is not fit to live in or use for its intended purpose.
It can cover a number of things, but is generally an intuitive coverage that operates on the common insurance principle of making an insured “whole.” That means you should be put back in the same, or as similar as possible of a position as you were in before the loss occurred.
With regard to living expenses, incurred costs (yes, you typically MUST spend this figure up front and be reimbursed afterwards) necessary to maintain your normal standard of living is paid, up to the policy limits.
What does this mean in general? If a part of your house is not functioning, say, your kitchen plumbing, and you typically cook your meals at home, you would be reimbursed for meals eaten at restaurants (excluding alcohol, which makes sense, and often excluding tip, which makes less sense) for the shortest possible time to get the kitchen functioning again. Sometimes, this amount may be more accurately calculated as the difference between your average grocery bill and the amount you spent at a restaurant.
If all of your house is not habitable, because there’s no power, it’s not secure after a theft, you have health concerns related to moisture, it’s unsafe after a fire, etc., there are significantly more things that are covered. A short term rental or hotel stay may be in the cards. Or maybe longer. If you have pets, you may be entitled to a more expensive rental that will accommodate those pets, or boarding costs. If you can stay with a relative and you are paying rent or bills, you are entitled to that reimbursement IF you are actually paying it (Please do not write a check that no one ever intends to cash. That is fraud.) If you have to travel additional miles to work or other places you regularly commute, you are entitled to fuel or mileage. There’s more, but these are the most common.
So what about in the aftermath of a hurricane or other disaster causing widespread damage? How do you deal with a dwindling supply of rental properties or hotel rooms?
This was a large problem in the aftermath of hurricane Michael. One of the easiest ways around the problem, if you can be accommodated by it, is to obtain a trailer or camper.
With limited supply of available rentals or hotels, and a skyrocketing price that quickly eats up your policy limit, a trailer or camper can be brought in from anywhere and be had at a semi-reasonable price.
BUT…
You aren’t supposed to be able to BUY a trailer or camper. Why not? “My neighbor got one,” someone might say. Your insurance is supposed to make you whole, not better. You’re supposed to be put back in the same position as you were before, and not a better one.
If you didn’t have a trailer or camper before, and you buy one, you’re in a better position.
HOWEVER…
If you’re hemorrhaging money on a rental or hotel and you’re definitely going to exceed your coverage, you may be mitigating your damages by buying a trailer or camper. You might be “better” but you’re fulfilling a policy duty to prevent damages and saving your insurance company money at the same time.
This type of purchase can be approved, but a cost benefit analysis would need to be done and presented to the insurance company for approval first.
If you’ve found yourself with damage in your home that makes it unlivable, or where the home is uninhabitable during the repairs of damage, contact VIP Adjusting to discuss your options to maximize recovery for your claim.
You might also be interested in:
Learning more about Additional Living Expenses and Loss of Use Claims; or