How Will You Pay Living Expenses if Your Home Is Destroyed By Disaster?

Homeowners insurance pays when a property is damaged or destroyed by a covered cause like a fire. This type of insurance can prevent property owners from having to empty their checking accounts if a devastating event happens.

But what if a home is destroyed or badly damaged? Chances are good the property owners will not be able to live in it for a long period while repairs are being made, or while the property is being rebuilt.

For homeowners who are forced to find a rental property or live in a hotel or find other accommodations, the costs can be very high. In fact, the average price of a hotel is around $171 daily. That would be a ton to pay for months on end, especially since mortgage payments would typically continue to accrue while the home was being repaired.

So, what can homeowners do and how can they cover these huge expenses? Here's one of the best options.

Make sure to get loss of use coverage when buying home insurance

Homeowners who want to make sure they can cover added costs they incur when their home is damaged should make sure to add loss of use coverage to their homeowners insurance policy.

Loss of use coverage is also called Additional Living Expenses (ALE) insurance. ALE insurance provides payment for reasonable extra living expenses that accrue when any or all of a home becomes unusable due to a covered loss.

For example, a property owner whose home was badly damaged by a fire would usually get reimbursed for the cost of a hotel or other temporary housing. Or a homeowner whose kitchen was flooded due to a broken refrigerator water line may be reimbursed for restaurant foods and prepared meals. Other potential things loss of use coverage could pay for include:

• Boarding a pet
• Extra gas costs if temporary housing is farther away from work or school
• Taking public transportation if a commute changes as a result of being temporarily displaced.

Loss of use coverage will pay up to the limits set in the policy when there's a covered loss and a property owner incurs additional costs because of it. For example, if a property owner has $250,000 in dwelling coverage and buys a loss of use policy with a limit equal to 30% of the dwelling coverage, then up to $75,000 in additional living expenses would be paid in appropriate situations.

Get covered before it's too late

Additional living expenses coverage must be purchased before a covered disaster for it to pay for a hotel, food, or other extra expenses caused by a home being damaged. Once a problem arises, it will be too late. Homeowners should check their policy to make sure they have this add-on protection in place.

Any property owner who doesn't have loss of use coverage should consider contacting their insurance company or insurance agent about adding it. Otherwise, they could find themselves out a ton of money when they have to pay for extra expenses if they are displaced from their home. Don't wait until it's too late.