Georgia Property & Casualty Practice Exam

Which coverage on Linda's homeowners policy will pay for the increase in living expenses due to evacuation from a wildfire?

1. No coverage is provided by her policy.

2. fair rental value

3. additional living expenses

4. personal property

The correct answer is: additional living expenses

The coverage that pertains to the increase in living expenses due to evacuation is known as additional living expenses (ALE). This coverage is included in homeowners insurance policies to assist policyholders when their residence becomes uninhabitable due to a covered peril, such as a wildfire. In the event of an evacuation, ALE provides funds for necessary expenses that exceed the normal cost of living, such as hotel expenses, meals, and other essential living costs that the insured incurs while displaced from their home. This helps ensure that the policyholder can maintain a reasonable standard of living while the home is being repaired or until they can return. Understanding the nature of ALE is crucial for homeowners, as it underscores the importance of having coverage in situations that lead to temporary displacement, ensuring financial support during stressful circumstances.