ADDITIONAL LIVING EXPENSES (homeowners policies)
If you have been forced from your home due to hurricane Katrina, your homeowners policy may provide for additional living expenses.
While the specific policy should be consulted, most policies provide coverage for up to 20% of the dwelling amount. For instance if you home is insured for $250,000 you additional living expense would be $50,000. The loss is adjusted based on the difference in expenses between your pre-loss expenses and post-loss expenses for housing and food.
"Homeowners insurance policies specify the amount of ALE coverage available. Generally, ALE pays for the difference between what it cost the family before the loss for housing and food and what it costs post-loss. As an example, before the loss a homeowner may have had a mortgage payment and utility bills (phone, electricity, etc.), and average monthly costs for groceries could be $500.
Post-loss, the homeowner/family is staying in a motel or rents an apartment and eats many meals in restaurants. The insurer will pay for the difference between the cost of all these items pre-loss (minus non-continuing expenses such as utilities) and the cost of these things post-loss. Policyholders should keep all receipts for lodging and meals to make the claims process easier.
Some insurers will provide ALE funds immediately upon being notified of a loss; others may reimburse policyholders at a later date. It is important for policyholders to contact their insurer or insurance agent for more information about this coverage.
It is important to note that ALE coverage is available only when the insured property is uninhabitable because of a loss covered under the homeowners policy. Federal flood insurance policies do not include ALE coverage, so this assistance will not be available when damage to a home occurred from flooding or storm surge.
The amount of coverage for ALE differs from insurance company to insurance company.
ALE coverage provides an important lifeline to policyholders whose lives are devastated by disasters like Hurricane Katrina," continued Bachman. "In many cases ALE coverage can help families leave shelters and move to better housing and hopefully improve the dire situation in even the slightest way" ( quoted from consumer affairs)
To give you an idea of additional living expenses go to http://www.irs.gov/businesses/small/article/0,,id=104627,00.html allowable living expenses based on income as determined by the Internal Revenue Service.
For addtional information please go to Louisiana Department of Insurance http://www.ldi.state.la.us/HurricaneKatrina.htm