Holicent
VIP Contributor
Additional living expense insurance is a type of insurance added to homeowners policies. Additional living expense coverage reimburses the insured for the cost of maintaining a comparable standard of living following a covered loss that exceeds the insured's normal expenses prior to the loss.
The typical homeowner's policy issued by an insurer typically provides $1 million in coverage for additional living expense losses. However, some policies may provide up to $2 million or even more in additional living expense coverage. The amount of coverage available depends on how much extra money you have compared with what it would take to maintain your normal standard of living without a major loss.
For example, if you have $100,000 in assets and $200,000 in debt and lose your home, you will probably be able to resume paying all of your bills after the loss because you won't need to cut back on things like food or clothing purchases. But if you had only $50,000 in assets and $100,000 in debt, there might be some things you can't afford to replace after losing your home. In this case, your insurer will probably offer additional living expense coverage that allows you to continue meeting all of your basic needs at a lower level than before the loss.
The typical homeowner's policy issued by an insurer typically provides $1 million in coverage for additional living expense losses. However, some policies may provide up to $2 million or even more in additional living expense coverage. The amount of coverage available depends on how much extra money you have compared with what it would take to maintain your normal standard of living without a major loss.
For example, if you have $100,000 in assets and $200,000 in debt and lose your home, you will probably be able to resume paying all of your bills after the loss because you won't need to cut back on things like food or clothing purchases. But if you had only $50,000 in assets and $100,000 in debt, there might be some things you can't afford to replace after losing your home. In this case, your insurer will probably offer additional living expense coverage that allows you to continue meeting all of your basic needs at a lower level than before the loss.
