If your house is wrecked by a disaster covered by home insurance, you don't have to couch-surf until the repairs are finished. Standard home insurance includes coverage for additional living expenses, or loss of use, which pays for extra costs to live while your house is uninhabitable. Those expenses can include rent, hotel stays, restaurant meals, storage fees and more.
The coverage is a lifesaver, but it can be tricky, and the rules are often misunderstood. This is especially true in the case of flooding. Standard home insurance doesn't cover flood damage and would not provide additional living expenses coverage if your home were uninhabitable just because of a flood. For that matter, flood insurance policies through the National Flood Insurance Program don't include additional living expenses either, although there are some privately sold flood policies that do. FEMA can help impacted homeowners and renters with alternative living expenses if the president issues a major disaster declaration and homes are uninhabitable. (See: " 5 ways flood insurance may soak you.") However, after a major disaster like Superstorm Sandy, your home might be uninhabitable because of other damage besides flooding, such as wind. Say, for instance, a tree blew over and crushed the roof. If your policy covered wind damage, then home insurance additional living expenses coverage would come into play. What if you can't live in your home because of a mandatory evacuation? Then additional living expenses would kick in only if the cause of the evacuation were covered under your policy, says Diane Swerling, a principal at Boston-based Swerling Milton Winnick Public Insurance Adjusters Inc, which helps consumers through the home insurance claim process. (See: "After Sandy: Public insurance adjusters work with homeowners to streamline claims.") Because of the many nuances and differences between policies, it's important to understand the coverage you have. (See: " Hurricanes and insurance: 5 must-know facts.") "Sometimes I do more work on the additional living expenses claims than the personal belongings and building claims," Swerling says.
Here are five tips for understanding how additional living expense coverage works: