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Home / Insurance / Additional cost of living: What does your insurance cover and for how long? – Blog for the law on property insurance

Additional cost of living: What does your insurance cover and for how long? – Blog for the law on property insurance



What are additional living expenses?

Additional living expenses are usually included as insurance coverage for homeowners under "Loss of use." In a recent blog post, Your Insurance Company Threats to End Loss of Use Prematurely Merlin Law Group's attorney Dan Veroff discussed the benefits of lost use and what operators do to reduce those benefits prematurely. As stated in that blog post, loss of use benefits are intended to cover the cost of temporary placement when the insured premises suffers a covered loss that makes it unusable until it is repaired.

What are the insurance provisions for "extra living costs" in general.

The following provision is an example of what coverage for "additional cost of living" provides:

C. COVERAGE D ̵

1; Loss of use
The limit of liability for coverage D is the total limit for the coverages in 1. Additional cost of living, 2. Actual rental value and 3. Civil authority prohibits use below.

1. Additional cost of living.
If a loss of a risk insured against under this insurance to covered property or the building that contains the property makes the "residential premises" not suitable to live in, we cover any necessary increases in living costs that you incur so that your household can maintain its normal standard of living

Payment is made for the shortest time required to repair or repair the damage or, if you move permanently, the shortest time required for your household to settle elsewhere.

Or the following provision:

D. Coverage D – Loss of use
The limit of liability for Coverage D is the total limit for the coverage in 1. Additional cost of living, 2. Actual rental value and 3. Civil authority prohibits use below.

1. Additional cost of living
If a loss covered by section I means that the part of the "residential premises" where you live is not suitable for living in, we cover all necessary increases in cost of living that you incur so that your household can maintain its normal

Payment will be made for the shortest time required to repair or repair the damage or, if you move permanently, the shortest time required for your household to settle elsewhere. This coverage does not apply to extra living costs that arise during any period of time when you have voluntarily and / or through a municipal mandate evacuated your "residential premises" while waiting for a "hurricane occurrence" and / or after a "hurricane event".

The language in both insurances reveals two important things about payments for extra living expenses:

  1. Such payments are intended to ensure that policyholders maintain their "normal standard of living", and
  2. such payments are available for the shortest time required for damages to be "repaired" or "

How do insurance companies stop payments for extra living costs prematurely?

The scenario where I have most often seen carriers try to reduce short payments for extra living costs is water losses with subsequent mold problems. After such losses, carriers will often pay a preferred contractor or remediation company to perform certain water remediation or mold remediation services. Carriers will then issue payment under the insurance's "extra cost of living" coverage for the policyholder to reside elsewhere while these services are performed. However, once the first "dry out" process has been completed, the carrier will stop paying for additional living expenses. Carriers will reason that they are no longer obliged to pay for extra living costs as the drying process is complete. The problem, however, is that the drying process primarily involves demolition – tearing out certain materials such as plasterboard, carpets, etc. – but that it does not necessarily involve "reconstruction" of any affected areas.

Contrary to what some transport companies may make homeowners believe, both policy language and reality indicate that additional cost of living is necessary until the damage is "repaired" or "compensated". It is unfortunate that some insurance companies will pressure their insured to return to homes where dangerous conditions remain by interrupting payments for extra living expenses. Coverage for extra living costs is the very reason why consumers buy property insurance – to ensure that the roof and walls that keep them out of the way remain intact. But what good is buying a home insurance policy if insurance companies can put consumers at risk by canceling payments for extra living expenses prematurely? , contact a lawyer at Merlin Law Group to have a look.


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