Additional Living Expenses

In addition to covering your personal belongings, your homeowners insurance also includes compensation for additional living expenses.

Let’s say, for example, your house is burned down by an electrical fire. You shouldn’t be faced with utility bills, but other costs will assuredly skyrocket. You won’t have to worry with the water bill or that blasted electricity, but you unfortunately won’t be sleeping in the comforts of your fluffy bed or enjoying fresh fare from your kitchen, either.

This is where additional living expense coverage within your homeowner’s insurance policy kicks in. You will need lodging, clothing, food and other items until your home is rebuilt so you will probably have to rely on a few nights’ stays in your local motel and enjoy restaurant food for awhile, in addition to other expenses.

Because every single homeowner’s policy is unique, you need to know what your policy’s coverage limit is. This amount will vary from insurer to insurer. Some insurance companies will allow unlimited cash flow in this area of coverage, while others will only provide coverage for a percentage of your total homeowner’s insurance coverage. This is a very important detail, so be sure to check your policy!

In the end, it is essential to know what you’re covered for because each homeowner’s insurance policy is different. You need to know what yours limits or excludes.

Is your homeowner’s insurance policy up-to-date? (Some policies automatically update your home’s current value. Does yours?) While it is easy to let that dust settle over your policy from year to year, keep in mind that putting it aside could cost you much more in the end. Your homeowner’s insurance policy may make heavy reading, but it will be even more burdensome should you not know what is covered in it.

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