State Farm Fire Independent Policy Practice Exam

If lightning knocks out the power to an area and the insured has an electric furnace, will additional living expenses (ALE) be payable in this situation?

1. True

2. False

3. Depends on the length of the outage

4. Only if damages occur to the furnace

The correct answer is: False

In the context of homeowners insurance, additional living expenses (ALE) are typically covered when the insured property becomes uninhabitable due to a covered loss, necessitating temporary relocation. If lightning causes a power outage but does not result in any physical damage to the home or its systems, the coverage for additional living expenses does not come into play. In this case, the power outage itself does not constitute a covered loss under the standard homeowners policy; thus, the insured would not be eligible for ALE benefits. For ALE claims to be valid, there must generally be direct physical damage to the dwelling leading to the need for additional living expenses. Since a power outage caused by lightning doesn't lead to damage to the structure or necessitate relocation in the same manner as fire or flooding would, the correct conclusion is that ALE would not be payable in this scenario.