Christine Barlow brings up some interesting points regarding the Homeowners policy's coverage for additional living expenses. In her interpretation, the policy should pay for an insured who lived like a king before the loss to live like one afterward:
As the FC&S editor who answers homeowners’ insurance questions, I know that one of the most common concerns for claims professionals is additional living expenses (ALE).
No matter how many questions I answer on the subject, there always seems to be another twist or turn in the issue. What is it that makes the ALE coverage so complicated?
For starters, it seems that the broadness of the coverage itself is a sticking point. The standard homeowner’s policy provides coverage for an increase in living expenses incurred by the insured so they can maintain their normal standard of living. That standard of living is the key; how the insured lived before the loss is what needs to be replicated after the loss. So any animals kept on the property get boarded, and if the insured has a swimming pool or hot tub, alternative living arrangements with similar items are required.
Another common issue is food. Some adjusters have balked at buying beer, wine, snacks, and such on the basis that these are not necessary or healthful foods. No matter, if this is what the insured typically eats, this is what the insured gets. If the insured is a gourmet cook and makes gourmet food every night, then once displaced the insured is entitled to gourmet food, even if it involves expensive, five-star restaurants.
The best way to look at additional living expenses is to look at how the insured lived before the loss, and duplicate it as much as possible after the loss. Indoor pets get to stay indoors, and the insured can live on cake and cognac as long as this is how the insured lived before the loss.
I've never received a question from an IIABNY member on this. I want to echo the question she asked at the end of her piece -- what has been your experience with these claims? What are adjusters' tendencies when they settle them?