South Carolina Personal Lines Practice Exam

What is typically included under Additional Living Expense coverage in a DP policy?

1. Temporary housing expenses

2. Legal fees

3. Property taxes

4. Content replacement costs

The correct answer is: Temporary housing expenses

Additional Living Expense (ALE) coverage in a Dwelling Policy (DP) typically provides financial assistance to insured individuals for living expenses incurred when their residence becomes uninhabitable due to a covered loss, such as a fire or other disaster. This coverage is designed to help policyholders maintain a reasonable standard of living while their home is being repaired or rebuilt. Temporary housing expenses are a key component of ALE coverage; this can include costs for hotel stays, renting an apartment, or any additional living costs that exceed what the insured would normally spend if they were still in their home. By providing this crucial support, ALE ensures that individuals are not financially burdened while undergoing the transition period after a loss. Other options, while they may involve financial considerations related to homeownership, do not fall under the scope of Additional Living Expense coverage. Legal fees pertain to legal matters separate from dwelling coverage, property taxes are ongoing expenses related to homeownership rather than immediate living costs due to displacement, and content replacement costs relate specifically to the replacement of personal belongings rather than living expenses incurred due to displacement.