If your house is damaged and you must find temporary accommodations elsewhere, additional living expenses coverage can help pay for associated additional costs.

ALE is a standard part of every best homeowners insurance policy, but there are limits to what it will cover.

What Is Additional Living Expenses Insurance?

ALE is a standard component of a homeowners insurance policy. It reimburses you for extra expenses if you’re forced to live elsewhere temporarily after a problem covered by your policy causes damage to your house and you file a claim.

Also called loss of use coverage, ALE is meant to cover the difference between your normal household expenses and your new expenses if you can’t live at home during repairs.

These extra expenses may include:

  • Hotel bills.
  • Furniture rental.
  • Laundry service.
  • Pet boarding.
  • Replacement clothing.
  • Restaurant meals.
  • Storage.

Renters insurance and condo insurance also typically have additional living expenses insurance.

Is There a Limit on Additional Living Expenses Coverage?

ALE is typically found under the “loss of use” section in a home insurance policy. ALE coverage is often set at 20% of your dwelling coverage.

Additional living expenses insurance is often set at 20% of your dwelling coverage. So if your house is insured for $300,000, for example, your policy may have $60,000 for additional living expenses. If you feel that’s not enough to maintain your standard of living if you can’t live at home, talk to your insurer about increasing your ALE limit.

You could also ask your homeowners insurance company if they offer “actual loss sustained” coverage, which increases the ALE coverage beyond a set percentage.

Homeowners insurance companies provide enough ALE reimbursement for you to maintain your normal standard of living. Don’t expect a stay at the Four Seasons—unless that’s your normal standard of living.

The homeowner and insurer will negotiate exactly what ALE will cover.

“The yardstick is a similar kind of home or apartment to yours,” says Insurance Information Institute spokesperson Janet Ruiz.

The insurance company is likely to set a specific time frame for completion of the repairs, so don’t expect three years as opposed to the usual two years in places where contractors and supplies are available.

Also, home insurance policies often set time or dollar limits on ALE in the policy and sometimes both. Check your home insurance policy’s declarations page for your total ALE coverage limit.

“Some specialty carriers have no time or dollar limit for high net-worth clients, but only a few provide unlimited ALE,” says Ruiz.

What if your home is only partially damaged? “For those victims the rub is whether it’s safe to reinhabit,” says Amy Bach, executive director of San Francisco-based United Policyholders, an advocacy group for those who are insured. There may be smoke residue, damage within the walls or dangerous materials like asbestos that were exposed by the fire.

“You need to know if your property has been properly cleaned or if your insurer is trying to take a shortcut,” she warns.

Examples of Additional Living Expenses

Let’s look at an example of when ALE coverage would kick in. Let’s say a fire causes extensive damage to your home. You need to live elsewhere for two months while workers remove debris and repair your home.

You live at a nearby hotel and have one restaurant meal each day, put your undamaged furniture into storage and buy new clothing to replace clothes that were damaged in the fire.

A homeowners insurance policy should reimburse you for those items up to your ALE coverage limit as long as they mirror your typical lifestyle.

It’s important that you save receipts for expenses while you’re living elsewhere. Insurance companies also subtract your regular expenses when figuring out how much you’re owed for additional living expenses.

For instance, living in a hotel may mean more restaurant meals, but it will likely also mean fewer groceries. Insurers figure that out to see how much you were spending on living expenses before you needed temporary housing and compare it to what you’re spending when away from your home.

Don’t forget to keep making your mortgage, real estate taxes and homeowners insurance payments. You may not be living in your home but that doesn’t mean that you can stop making those payments and don’t expect your insurance company to help with those expenses.

What Additional Living Expense Insurance Doesn’t Cover

You can make a claim for additional living expenses only after damage that is covered by your homeowners insurance policy, such as fire, smoke damage or water damage from a burst pipe.

The most glaring omission for additional living expenses insurance coverage is flooding. While it’s easy to purchase flood insurance from FEMA, ALE isn’t provided in flood insurance. And there are limits to the amount of FEMA’s coverage: $250,000 for the home itself, and nothing for living expenses while it’s under repairs.

Private flood insurance policies may include coverage for additional living expenses.

An earthquake isn’t covered under most homeowners insurance either, so additional living expenses aren’t covered after quake damage. You’d have to purchase a separate earthquake insurance policy or rider to your regular insurance coverage. Earthquake insurance can include ALE coverage.

Additional Living Expenses Claims for a Mandatory Evacuation

You can also make an ALE claim if your area is required to evacuate—even if your home is not damaged.

This situation confronted hundreds of thousands in California due to firestorms, as well as the power outages and water shortages that followed. In this case, the state requested that insurers allow these displaced homeowners to receive extra coverage for ALE rather than the usual two weeks contained in most policies.

This could happen anywhere there are high winds, or in suburbs where forests inch right into backyards. You’ll find this coverage in the “Civil Authority Prohibits Use” section of the insurance contract. But a simple loss of utilities, such as an ice storm knocking down a power line or a planned power outage “would not trigger ALE,” says Ruiz.

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