July 17, 2023

Homeowner Insurance 101: Are you covered for additional living expenses?

Additional living expenses (ALE) coverage can make a temporary living situation more bearable after a home disaster.

Has your home ever been impacted by a storm or other disaster? In some cases, the damage to a home is so severe it requires moving out while extensive repairs are undertaken to make it livable again. Additional living expenses (ALE) coverage, also known as loss-of-use insurance, can be very important in this type of emergency. Is your home covered?

Keep reading to learn how having sufficient ALE coverage can make a temporary living situation more bearable after a home disaster.

How ALE coverage works

Many homeowner or renter insurance policies include ALE coverage. It is designed to help you meet the costs of temporary living arrangements if your home becomes uninhabitable due to a “covered event” such as a fire (including fires caused by lightning strikes), storm or other type of damage, such as undetected water leaks or even vandalism.

Additional living expenses are reimbursed after you submit the required receipts or other paperwork. These expenses are considered “incremental,” which means the policy covers extra expenses you incur because you are not able to live in your own home. Because you would not normally spend that extra money, these additional expenses are reimbursable. For example, say you normally spend $250 per week for groceries. If you are forced to eat your meals out because your hotel room does not have a kitchen, you may be spending $350 per week on meals. The incremental expense of $100 is reimbursable through your ALE coverage.

Another example includes having to drive farther to get to work. The amount you pay above your usual gas costs would be reimbursable. Or perhaps you are required to board your dog during your time living in rental housing. That cost would be reimbursable.

Before disaster strikes, be sure to review your additional living expenses (ALE) coverage limit to ensure you will have enough.

Coverage details for additional living expenses

Here is a brief rundown on what ALE coverage encompasses:

Covered Events: ALE insurance applies when your home is damaged by an event covered by your insurance policy. These events typically include things like fire, vandalism or severe weather.

Uninhabitable Home: If your home becomes uninhabitable as a result of a covered event, ALE insurance kicks in. This means that it’s not safe or possible for you to live in your home until repairs or restoration are completed.

Temporary Living Arrangements: ALE insurance helps cover the costs of temporary living arrangements while your home is being repaired or rebuilt. This can include expenses such as hotel bills or rental apartment fees, restaurant meals, emergency clothing, laundry service, pet boarding, storage, and other necessary living costs.

Coverage Limits: Be aware of the specific limits for ALE coverage on your policy. Insurance companies typically set a maximum amount, or a percentage of your policy’s dwelling coverage that can be used for additional living expenses. The ALE percentage is typically 20% up to 30%, depending on the insurance carrier. Travelers Insurance provides the following example: If your ALE limit is 30% and your dwelling coverage limit is $200,000, you would be covered for up to $60,000 under your ALE coverage. Before disaster strikes, be sure to review your ALE coverage limit to ensure you will have enough, should you need it. One specific reason to purchase additional ALE coverage is if your home is in an area prone to natural disasters.

Time Limit: Postponements and delays to the repair or rebuilding of your home could come into play. ALE insurance has a time limit, which means it only covers your additional living expenses for a certain period. The duration can vary based on the policy and the circumstances of the damage to your home.

Assess your ALE coverage now, to ensure a better outcome after a disaster

ALE insurance is meant to provide temporary assistance and help you maintain your standard of living while your home is being repaired. It’s a good idea to review your homeowner or renter policy to confirm that your policy includes ALE coverage and if so, learn what your ALE coverage limit is. Is your limit high enough? Call your Bradish agent to help you gain a clear understanding of what expenses are covered, assess whether you might need a higher limit, and find out how long the coverage will last after a disaster. With the right ALE coverage, life in temporary housing can be a lot less challenging.

by Kris A. Mainellis