When you bought your homeowners insurance policy you knew that it was with the intent of taking care of the large bills that could come up along the way, but many homeowners never expect just how large those bills can be when they file their homeowners claims – and how the damage that caused those bills will affect their ability to live in their home. A huge percentage of homeowners claims filed every year are filed because the home has been structurally damaged past the point of being livable. That means that not only do these homeowners have to deal with the anxiety that comes with repairing their home, for many that also means that during the course of those repairs they’re going to have to deal with the question “Where am I going to live now?”
The bottom line is that mortgage lenders aren’t usually willing to put a freeze on your mortgage payments just because your home’s been damaged past the point of repair. You’re still going to be paying every month for a home you can’t live in. If you’re like most Americans, that also means that you don’t have enough expendable income left over at the end of the month to handle the added expense of renting a hotel room and/or apartment for weeks, months or even years while you’re waiting for the construction crews to finish. That’s where your homeowners insurance comes into play.
Most homeowners insurance policies have an addendum for something known as “Additional Living Expenses”, and that part of your policy exists for the sole purpose of making sure you’re never left begging friends and family for a couch to sleep on while your home is being repaired. Your homeowners insurance provider will pick up the tab for any expenses above and beyond your normal living expenses, including (but not limited to):
· The cost of a hotel room.
· The expense of eating out while you’re staying in a hotel.
· Renters insurance.
· Security and utility deposits following the move.
· The expense of renting furniture and electronics for your new apartment, if necessary.
· Lost rent, if you generally rent out part of your home.
The bottom line is, through additional living expenses you can rest assured that you’re never going to find yourself homeless just because your house is temporarily down for the count. The limits of your additional living expenses vary by insurance provider, however, so it’s a good idea to know what your policy’s limit before you start running up a tab! Most homeowners insurance providers calculate the amount of money they’re willing to pay using one of two criteria:
1) Time. The company (hopefully with the help of the contractor who appraises your repairs) decides on a reasonable time frame for which you would need additional living expense coverage. You’re responsible for any expenses above and beyond that point.
2) Percentage of your insurance policy. Some companies use a certain percentage of your insurance coverage (usually around 20%) to determine how much they’re willing to pay. For example, if your home was insured for $200,000, your additional living expenses would stop once you’d reached $40,000.
There’s no place like home, but with your homeowners insurance you can rest assured that you’re never going to be scrambling for a roof over your head or food on your plate just because Mother Nature (or another natural or unnatural disaster) decided they couldn’t keep their hands off your house.