This type of insurance coverage pays for some of the additional living expenses you will experience if you have to live somewhere other than your home or apartment in the event of a covered loss.

For example, whether you rent or own your place, if there’s a fire and you have to move out while repairs are made – if you have additional living expenses as part of your homeowners or renters insurance policy – the insurance company will reimburse you for the cost of staying at a hotel, having to eat restaurants, etc.

Coverage for additional living expenses is different from company to company so be sure to ask for specifics when shopping around for a quote.

When it comes to homeowners insurance policies, many provide coverage for about 20% of the insurance on your house. So if a house is insured for $500,000, the coverage for additional living expenses will be $100,000. You can get more coverage but it will increase your premium.

Another option may be getting a loss-of-use policy. You can get a loss-of-use policy from some insurance companies that will give you an unlimited amount of additional expense coverage – but there will be a limit on the amount of time you are covered for.

If you rent out part of your house, this coverage also reimburses you for the rent that you would have collected from your tenant if your home had not been destroyed.

Since renter's policies don’t include protection of the dwelling, the additional living expenses coverage will go by the amount of personal property coverage they have – usually 20%. So if a renter has $25,000 in personal property coverage, he will probably have only $5,000 in additional living expense coverage.