If you live in a 5,000-square-foot house with flat-screen TVs in every bedroom, a pool in the back yard and a Jacuzzi on the patio, then that’s the kind of plush conditions you’re entitled to living in your home after a disaster – and you can claim these additional living expenses on your home insurance.
Additional living expenses, or loss-of-use, coverage is part of a standard home insurance policy. It pays for the costs of living somewhere else while your home is being rebuilt or repaired after a disaster. The coverage pays for hotel and restaurant bills, rent and other expenses necessary to to maintain your normal standard of living.
“Normal” is the key word. Don’t expect an insurer to put you up in a mansion if you live in a bungalow.
Here are some common additional living expenses:
You can claim extra expenses for eating out if you don’t have access to a kitchen. But do you go to a diner or a steakhouse? Again, that depends on your normal lifestyle. If you routinely eat gourmet fare, then you can be reimbursed for the extra costs of ordering comparable meals, even at five-star establishments.
But the insurance company doesn’t pick up the whole tab, says Michael Hickle, a licensed public adjuster at Alex N. Sill Co., a firm of public insurance adjusters headquartered in Cleveland. If you have to eat out, the insurer pays only for the amount above what you’d normally spend on food, so your typical grocery expenses are subtracted from the amount you spend at restaurants. Once you’re settled in a place with a kitchen, the insurer does not reimburse for restaurant meals.
Hotel accommodations should be comparable to your lifestyle, but that doesn’t necessarily mean you stay at the swankiest hotel downtown if you live in an upscale neighborhood or an off-brand budget motel if you live on the wrong side of the tracks.
Hickle says insurance companies prefer to place policyholders in high-quality residence hotels so people have access to kitchens and are as comfortable as possible. They also help them find a temporary home quickly to limit hotel stays. Typically they don’t want you to stay at a hotel for more than 30 days.
Assuming you owned a washer and dryer at home, you can claim expenses for laundry services while you’re staying in a hotel.
Insurers often work with companies that specialize in locating comparable rental homes and furnishings for policyholders. Typically they start looking for homes in your neighborhood and then present you with choices.
But public adjuster Raymond Altieri Jr., president and CEO of Altieri Transco American Claims in Tampa, Fla., says he likes the idea of policyholders working with a trusted real estate agent to find a rental property that meets their needs.
“My recommendation is to get yourself into a location where you can be comfortable for the long haul,” he says. “You don’t want to be pressured into the decision.”
You don’t have to accept a two-bedroom apartment if you live in a four-bedroom, three-bath house with a pool and three-car garage, says Altieri, who is first vice president and incoming president of the National Association of Public Insurance Adjusters.
On the other hand, unreasonably pickiness could delay getting settled.
“Thirty days in a hotel gets old real fast,” he observes.
The insurance company pays for furnishing the house, usually by working with a rental company, so your living space is comparable to your own home. If you have three big-screen TVs at home, you can argue for having the same number in the rental house.
Mileage and utilities
Say, for instance, the rental house is in a different neighborhood from your home. Your children can no longer take the school bus, and you and your spouse have to drive farther to work. You can claim mileage expenses for the extra distance you drive, Altieri says.
You can also claim utility expenses that are beyond what you typically paid before your home was damaged.
If you have to board your pets while you’re in a hotel, the insurance company generally picks up the boarding tab.
You might be able to claim expenses for storing some of your possessions while your house is being repaired.
Insurers do their best to be fair, Hickle says, but sometimes misunderstandings arise. Many homeowner insurance policies include dollar limits for additional living expenses. Hickle says some policyholders mistakenly think they’re entitled to the maximum amount, regardless of what they actually spend. You must incur the extra expenses to get reimbursed.
Altieri recalls one couple who wrongly believed they were entitled to purchase a recreational vehicle, which they planned to live in next to their damaged home while it was rebuilt.
To avoid problems, understand your coverage, keep your receipts organized and obtain written authority from the insurance company before making any big-ticket expenditures, Altieri says.
He also recommends hiring a public insurance adjuster, who works on your behalf to help you prepare, file and adjust claims. Insurance company adjusters work for insurance companies, and they don’t have time to do much hand-holding through the process.
“They’re handling hundreds of files at a time. A public adjuster provides personal service,” Altieri says.