Don't Overlook This Crucial Type of Homeowners Insurance Coverage

by Christy Bieber | Published on July 26, 2021

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A man and woman sitting at their dining table and opening takeout food containers.

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Homeowners may want to ensure their policies offer this protection.

Homeowners insurance provides coverage for property and the possessions within it. Most homeowners know they need dwelling coverage in case their house is damaged or destroyed, as well as personal property coverage to protect the items they own.

However, there's another type of insurance that many homeowners will want to purchase. It's often overlooked, but it could prevent serious financial loss if something goes wrong.

Homeowners shouldn't forget this type of insurance coverage

The crucial type of homeowners insurance that many people don't realize they need is called "additional living expense" coverage. This pays for many added costs that a policyholder incurs as a result of a covered loss to their property.

Say, for example, there is a kitchen fire in the home. Dwelling coverage would pay for the homeowner to repair and rebuild after the damage. But while a new kitchen is being constructed, the homeowners would likely face added food costs.

They might need to eat out more or get more takeout because they have nowhere to cook. This would cost more than their normal monthly food bill -- and they could face these extra expenses for months as the kitchen is restored. Additional living expense coverage would pay for these added costs while kitchen repairs are underway.

It would also cover other costs that homeowners face whenever a devastating loss occurs in the home.

For example, if a house is entirely destroyed by fire and the homeowners need a different place to live until it is rebuilt, additional living expense coverage might pay for a hotel, pet boarding, laundry service (if no washing facilities are available), and other expenses arising from the displacement due to the disaster.

The costs associated with being displaced from a house or having major home components damaged can be very high. And homeowners without additional living expense coverage could be left to bear these expenses themselves. This could cause serious financial hardship, especially for property owners who are forced out of their homes for a long time.

For homeowners without additional living expense coverage, it's worth asking an insurer what the added cost of this protection would be. Adding it to a policy can provide the peace of mind of knowing costs will be covered when things go wrong. And property owners buying new coverage for the first time should seriously consider including this among their coverages because no one can predict when disaster will happen -- and additional living expense coverage is a key part of being prepared.

Homeowners can shop around with insurance providers to see how much this coverage costs, and they can compare prices for dwelling protection, personal property protection, and liability protection. Getting quotes from several insurers can help property owners get the full amount of protection they need at a price they can afford.

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