Insurance Coverage and Information

04May 2017

Part 2- Homeowners Insurance Policy: Living Expenses aka Additional Living Expenses or ALE.

ARS CLEANUP Fire ALE

If your bedroom looks like this after a Fire, there’s a good chance you will need to talk to your insurance adjuster about ALE.

Have you ever thought were your family would stay if your home was no longer livable? After a Fire or large flood in your home, chances are you might not be able to stay there while the damage is being cleaned up. If you don’t have family nearby, where will you stay? What will you eat? How do you pay for a place to live and food when you just bought groceries that are now unusable and have to continue paying your mortgage?

Standard Homeowners insurance provides coverage for Additional Living Expenses or ALE. Those expenses can include hotel stays, rent, meals, and storage fees.

However, most insurance companies do not provide this coverage if your home is flooded. Flood insurance policies through the National Flood Insurance Program also don’t pay out ALE. Check with your agent if you are able to add ALE to your homeowner’s policy in the event of a flood. FEMA can help with displaced homeowners, but as with anything government, don’t rely on it.

A few things to consider when reviewing your ALE coverage is:

Most insurance companies cap living expenses to 20% of the dwelling coverage.

Insurance companies can also set a time limit on how long you can receive ALE—some it is 12 months, which seems adequate, but when cleaning out, gutting, and rebuilding a home, it can sometimes go longer. Make sure when you choose a Restoration Contractor, you give them a deadline so you are not paying out of pocket to live out of your home.

Don’t overlook your extra expenses.

Eating out when you have no kitchen, pet boarding, or laundry are expenses you can deduct from your ALE. You can also look into extra mileage if you are having to drive further to work or school. You can also request reimbursement for any additional storage fees if you have items your Restoration Contractor is not storing for you.

Keep all of  your receipts.

Insurance companies will not pay out your ALE if they have no proof of the expenditures.  Remember this is additional coverage. It will not pay for your mortgage payment or utilities at your house.

When choosing a housing option, get something comparable to what you lived in.

Keep in mind, hotels get old really fast when you have to live there compared to when you are on vacation. A family of four may be comfortable in a 4000 square-foot home will probably struggle to stay in a 1500 square-foot apartment for any extended period of time. Pick a reasonable location where your family can be happy for an extended period of time.

Pick a Restoration team that oversees the job from start to finish.

ARS Cleanup is a Complete Restoration company that can help you remediate and restore your home after a disaster in a timely manner! ARS Cleanup also works directly with your insurance company to help get you the most bang for your insurance buck.

24Jan 2017

ARS Cleanup Homeowners Insurance Policy

Part 1-Homeowners Insurance Policy: Structure and Possessions

Restoration Contractors often hear customer’s frustrations regarding their Homeowners Insurance Policy. More specifically, Estimators and Repair Managers at ARS Cleanup report customer confusion regarding what their policy does and doesn’t cover.

Unfortunately, Restoration Contractors cannot change the Insurance Industry to cover all the costs associated with a disaster. However, the experts at ARS Cleanup have compiled a few tidbits to help homeowners better understand their Homeowners Insurance Policy.

  • Review your Insurance Policy yearly. Meet with your Insurance Agent yearly to guarantee you have adequate coverage to in regards to the structure of your home. Remember, what you paid for your home 20 years ago is vastly different than what it would cost to rebuild your home today.  Examine the materials used to build your home. Ensure you have adequate amounts of coverage to replace like quality with the same materials.
  • Homeowners should ask their Agent whether or not they can add to a Backup of Sewer and Drain endorsement. A sewer flood is rarely covered by Homeowners Insurance Policies. 
  • When significant damage occurs in a home, systems including HVAC, plumbing, and/or electrical may need to be entirely replaced. City Building Inspectors require homes with extensive construction to be brought up to code following a disaster. Consider adding an Ordinance or Law Endorsement which pays a specified amount for the additional cost of Code Updates.
  • Most Insurance Policies provide coverage for personal possessions. When reviewing your coverage, examine your policy to learn if you have Replacement or Actual Cash Value. Replacement covers the cost of replacing a damaged item with a new item of similar quality without depreciation or deduction. Actual Cash Value gives you what the item would cost if you were to sell it today.
  • For more expensive items like firearms, jewelry, silverware, or furs, consider an endorsement or floater policy to your homeowners insurance. A standard policy typically has a $1k-2K limit for jewelry. Regardless of what coverage you have, it’s important to take inventory of your home on a yearly basis. ARS Cleanup recommends documenting each item worth over $500 in your home. In addition to documentation, take detailed pictures of each room and closet with their contents. By doing this, it will save a lot of frustration during the event of a disater. 

Standard Homeowners Policies typically cover damages caused by fires, hail, lightning, explosions, and theft. Most DO NOT cover flooding, earthquakes, backup of sewer and drains, or damage caused by negligence.

In the next blog post, experts from ARS Cleanup will go over addition living expenses following a disaster, liability to others, and Umbrella Policies.