In the case of a claim, what additional living expenses are covered?
If an insured peril (see next question) makes your home unfit to live in, and you have to move out while it is being repaired, your insurer will cover any necessary increase in living expenses, including moving costs, so that your household can maintain its normal standard of living. Payment, usually not exceeding 20% of the building coverage amount, is limited to the reasonable time required to repair or rebuild your home, or for you to settle elsewhere.
Fair rental value: If you lose a tenant because of an insured peril, your policy will cover fair rental value for the reasonable time required for repairs or rebuilding. Rent-related expenses (heating or electricity, for example) that don’t continue during reconstruction aren’t covered, nor is a lease cancellation. The total coverage available under this provision, too, is limited to a percentage of the building coverage amount.
Access denied: If the police or other civil authorities deny you access to your home as a direct result of damage by an insured peril to neighbouring premises (or perhaps because of an event such as a forest fire), you may be reimbursed by your insurer for additional living expenses and/or lost rental income for up to two weeks. Additional coverage is sometimes available in the event of mass-evacuation (following a toxic spill from a train wreck, for example). As this is a relatively new form of coverage, be sure to check your policy wording carefully.