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Additional living expense coverage is typically part of a standard homeowners or renters insurance policy. This type of coverage helps pay for certain costs if a covered event (like a fire) forces you to temporarily relocate from your home.
Here’s what you need to know about additional living expense (ALE) insurance:
- What is additional living expense (ALE) insurance?
- How does ALE insurance work?
- How do I file an ALE claim?
What is additional living expense (ALE) insurance?
Additional living expense (ALE) insurance covers additional costs of living if you’re temporarily displaced from your home while repairs are being made. Most homeowners and renters insurance policies include this coverage.
ALE coverage helps you maintain your normal standard of living, even if your home is deemed temporarily uninhabitable. It also allows you to maintain privacy and independence in your short-term housing arrangements. The coverage will last until you reach your policy limit or until your home is fully repaired — contact your insurer to find out what your coverage limit and time frame are.
How does ALE insurance work?
ALE insurance only kicks in if your home becomes uninhabitable after a loss that your insurance policy covers. Keep in mind that not all home insurance policies cover the same perils. It’s best to contact your insurance carrier to see what’s covered and what’s not, since your insurer must approve the ALE claim.
For example, if a fire destroys your home and you no longer have running water or electricity, your insurance provider will pay for you to stay in temporary housing (such as a hotel) and pay for additional living expenses while your primary residence is being repaired.
Some expenses an insurance carrier may pay for under an ALE coverage claim include:
- Temporary accommodations, like a hotel or a short-term rental
- Restaurant meals
- Pet boarding
- Public transportation costs
- Storage units
- Additional utilities
Your insurance carrier will conduct an assessment of how the claimed costs compare to your normal lifestyle when deciding how much to reimburse you.
For example, if you normally pay $750 in rent and live in a hotel that costs $1,800 per month, the insurer may not cover the $1,050 difference. Or, if you live in a hotel that doesn’t have a kitchen, the insurance carrier may reimburse you for more restaurant meals (up to a certain limit) and assume your grocery bills will be lower because of the lack of kitchen space.
What doesn’t ALE cover?
Additional living expense coverage doesn’t provide coverage for damage to the physical structure of your home or belongings. If either of these events are due to covered perils, other parts of your insurance policy will typically protect you.
For instance, if your home was damaged due to a windstorm, the dwelling coverage in your homeowners insurance policy will generally pay to repair the physical damage to the home, assuming the insurance carrier approves your claim.
Additional living expenses coverage also won’t cover your mortgage payment — you’ll need to continue making these payments yourself.
Read More: Homeowners Insurance Guide: Everything You Need to Know
How do I file an ALE claim?
If your home is uninhabitable and you want to file an ALE claim, here are the steps you need to take:
- Contact your insurance carrier. Be sure to speak to a representative about exactly how ALE insurance works for your specific policy, how your expenses will be paid (you’ll typically get reimbursed), and what expenses count under your current coverage.
- Follow your insurance provider’s guidance. Your insurer should explain how to take advantage of your ALE coverage. In many cases, insurance carriers have a large network that can help you find temporary housing and transportation arrangements.
- Save your receipts. Make sure to save receipts for all your expenses so that you’re ready to present them when it’s time to be reimbursed.
- Document your increase in expenses. Since ALE only covers the increase from your regular costs, it’s important to provide proof of the difference between your temporary living costs and the regular costs of living in your home. For example, you may want to show your mortgage costs and compare that to your hotel costs.
- Make sure you have written authorization. By getting clear written communication from your insurer on what you can receive reimbursement for, you can avoid miscommunication and spending money on expenses that aren’t covered.
Learn More: How to Estimate Your Home’s Replacement Cost Value
What is the limit on ALE?
The limit on additional living expense coverage will depend on your insurance carrier and homeowners insurance policy.
Most home insurance policies include ALE coverage up to 20% or 30% of your dwelling coverage (the insurance you have on your home itself). So, if your dwelling coverage limit is $200,000, then your ALE limit could reimburse you up to $60,000.
To find out what your specific limit is, you can usually check your insurance policy’s declarations page.
So, if the insurance carrier estimates your home will be repaired in six months, you can typically expect ALE expenses to be covered for that time. But keep in mind, if you reach your limit before that point, the insurer will no longer provide coverage.
Whether you own a home or rent an apartment, having insurance is essential. You can use Credible to compare quotes from top insurance carriers and find the best price for the coverage you need.