A homeowner's monthly household expense is $500. If the new living arrangement costs $700, how much will be covered by the homeowners policy?

In this scenario, the homeowner currently has a monthly expense of $500. The new living arrangement increases this expense to $700. The difference between the old and new expenses is $200, which represents the additional cost being incurred due to the change in living arrangements.

Homeowners insurance policies typically include provisions for additional living expenses, also known as loss of use coverage, which can cover the costs of temporary housing when a policyholder's home is uninhabitable due to a covered loss. This coverage often extends to the expenses above and beyond what the homeowner usually spends on housing.

Since the homeowner's prior expense was $500, and the new cost is $700, the policy would cover the increase of $200 as this represents the additional living expenses necessary for the homeowner to maintain their standard of living. This is why the amount covered by the homeowners policy in this situation would be $200.