In-Law Invasion Insurance

Where do you go when a fire, tornado or other disaster makes your home uninhabitable? According to media reports of these catastrophes, the American Red Cross comes to the rescue and provides emergency temporary shelter - a hotel stay, emergency funds for food, etc.  But what about the following weeks while the grueling process of reconstructing your home begins?  Do you live with the in-laws?  Ugh.

Yet another reason to carry a renters or homeowners policy.  Most of these policies automatically include "Additional Living Expense" coverage, often referred to as ALE. Additional Living Expense covers increased living expenses incurred by you so that your household can maintain its normal standard of living.  Examples of these types of expenses are:

• Rent for a place to live, be it an extended stay hotel, an apartment or dwelling
• Cost to eat out
• Expense of laundry facilities
• Cost of a boarding facility for your pet

Beware!  Not all policies are created equal.  Some policies will limit this coverage to a percentage of your dwelling or contents amount.  For example, if your home is insured for $100,000, the ALE limit might be 10%, 20% or 30% ($10,000, $20,000 or $30,000).  Other policies will limit ALE to a set dollar amount.

The best option is the policy that provides the ALE limit at "Actual Loss Sustained".  In laymen's term, "Actual Loss Sustained" means "whatever it costs" - unlimited until the dwelling is repaired.  Sweet!

Danger!  Some policies with an ALE limit of "Actual Loss Sustained" will then limit the amount of TIME that you can collect for your additional living expenses.  A common example is 12 months.  At first glance you may think 12 months is adequate time, but I caution you to think again.  If you know anyone who has suffered a total loss of their home or apartment, they can attest that it often takes more than a year to get back into the home. Before reconstruction begins, there are permits to be obtained, plans to be designed, materials to be purchased - time consuming events.

What's a savvy home insurance consumer to do?  Find a policy that provides "Actual Loss Sustained" as the coverage amount with NO TIME RESTRICTION.   Then, no matter how long it takes, or what it costs, you will be reimbursed by your insurance company for food, rent, laundry services, etc., until you move back into your residence.

Confused?  Contact your Trusted Choice agent for a detailed analysis of what coverage you currently have, what coverage limit you think you need and how to meld the two into one policy.

Final thought.  In the event of a fire, if you really want to live with your in-laws, your Additional Living Expense coverage will pay rent to them on your behalf.  But, is it worth it?