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Additional living expenses help when you can't be at home

If your home is rendered uninhabitable due to a fire, storm or vandalism, your home insurance can come to the rescue. In most cases, your insurer will pay for your lodging, along with other related expenses, under a standard home insurance provision known as "additional living expenses." Check your policy language to make sure you have this coverage.

Additional living expenses are designed to cover the cost of living someplace other than your home. Typically, your insurer will cover necessary increases in living expenses — including moving costs — so that you can maintain your normal standard of living.

home insurance pays for hotels

According to the Insurance Information Institute (III), those expenses could include the cost of a temporary rental home or hotel room, restaurant meals and any other expenses incurred while your home is being repaired or rebuilt.

The coverage kicks in when you are forced to temporarily move out of your home for any number of reasons — as long as they are considered a "covered peril." This includes fire, lightning, theft, riot, windstorm or hail, explosion, a sudden release of smoke, impact by aircraft or vehicle, vandalism or damage from a falling object. Earthquake insurance is an extra cost.

But there are also limits to additional living expenses. Payment is limited to the reasonable time required to repair or rebuild your home, or for you to settle elsewhere. The dollar limit for additional living expenses is usually equal to 20 percent of your structure's coverage, according to III. The provision could also pay out if the police or other civil authorities deny you access to your home as a direct result of damage to a neighboring home, or in the event of mass evacuation.

The amount of living expenses you are eligible to claim can be limited to your "normal" standard of living. For example, if you were living in a small split-level house, don't expect your home insurance insurance company to pick up the tab for a suite at the Ritz or pay for a lobster dinner every night.

Insurance companies have different rules for how the money is doled out, so check your policy language. Some companies will start by giving you a certain amount of cash up front, while others opt to reimburse you afterward. In both cases, your insurance company will want to see receipts for all expenses.

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