What Is Additional Living Expense Coverage? 

Do you have a plan for where and how you would live if your home became uninhabitable due to damage? If not, you might consider additional living expense coverage. 

Offered under most homeowners, renters, and condominium insurance plans, this coverage helps you maintain your standard of living until your home is repaired. Your insurer may reimburse you for many of your living expenses above what you typically spend if your home is damaged by a covered peril.

What Is Additional Living Expense (ALE) Coverage?

Additional living expense coverage pays the extra costs of relocating after your home, apartment, or condo is left uninhabitable due to a fire, tornado, or other covered natural disaster. This coverage is typically part of most homeowners, renters or condo policies and reimburses you for the cost of living elsewhere while your home is repaired

An insurer may reimburse you for only the costs that exceed your normal living expenses. The coverage pays you the difference between the additional costs you incur while temporarily away from home and what you normally spend.

For instance, you can get paid for a hotel room or a home rental, but you still have to pay your mortgage for your home or rent for your apartment.

The amount of money has limits, and the duration may also be limited. Considering that, consider reviewing your policy and talking to your insurance agent to understand your limits.

How Does Additional Living Expense Work?

When you suffer a loss, your insurance company will open a claim, likely involving ALE coverage. However, ALE is paid differently. You must track your expenses and keep receipts to be reimbursed later.

For your recommended course of action if a tornado rips off your roof and you and your family need to live somewhere else temporarily:

• Keep your receipts: You may need shelter before an insurance adjuster inspects the damage.
• Calculate your normal cost of living: This can help set the bar for what you may be reimbursed.
• Speak with your insurance agent or insurer: Discuss the receipts submission procedure.
• Track reimbursable expenses: This includes retaining all related receipts.
• Hire a public insurance adjuster: They’ll help you prepare and file claims.
• Submit your claim: This is the last step before getting reimbursed.

The goal of ALE is to allow you to maintain your standard of living. Thus, if you find a home to rent on the other side of town, you can be reimbursed for the rental and furnishings that meet your standard of living. 

Similarly, if you have to drive farther to work, you can get paid for the extra distance. Remember, though, that if you have access to a kitchen, you may not receive money from the insurance company to feed your family.

The key to getting reimbursed is getting and keeping all receipts. A public insurance adjuster, unlike an adjuster from the insurance company, works for you and can help you get the most from what you receive. Submit your receipts according to your insurer's directions.

What Does Additional Living Expense Cover?

ALE is intended to help you maintain your lifestyle away from home while your house, apartment or condo is being repaired. Here are expenses you can receive payment for if they are above your normal costs of living:

• Hotel stays or home rentals
• Use of a family member's or friend's home 
• Restaurant meals if you lack kitchen access 
• Replacement clothes
• Furnishings
• Utilities beyond typical costs
• Mileage for extra distance to work or school 
• Laundry
• Storage
• Pet boarding

Consider checking with your insurance company to learn what may be covered. The company will pick up expenses above what you would normally pay if you were in your home.

What Does ALE Insurance Not Cover?

ALE coverage doesn’t pay for your normal expenses, so you must continue to make any usual payments and not expect insurance money for your:

• Mortgage
• Rent
• Groceries
• Utilities

ALE only pays when the damage to your home results from a covered peril. You can’t claim additional living expense reimbursements after an earthquake or flood. You can purchase flood insurance, but most flood insurance policies do not include ALE. You can, however, buy an ALE rider with earthquake insurance. 

How Much ALE Coverage Should You Have?

The amount of additional living expense coverage you should have depends on where you live and the expenses you anticipate if you must live elsewhere for a time. Most insurers provide ALE coverage up to 20% of the insurance coverage on your dwelling. 

For example, if you insure your home for $400,000, your ALE limit would be $80,000. Some insurers allow you to purchase additional coverage.

Additional Living Expense vs. Loss of Use

Additional living expense coverage and loss of use coverage are often used interchangeably, even by insurance professionals. Thus, it is understandable if you find the terms confusing. 

Additional living expense coverage is one of three types of loss-of-use coverage. Loss of use is the broader term and reimburses for fair rental value and prohibited use.

• Fair rental value: If your tenant is displaced by covered damage to your home, you can be reimbursed for the lost rent.
• Prohibited use: You can get reimbursed if authorities block your street or if you must evacuate for a natural disaster.

The loss-of-use claim process works the same for ALE, fair rental value and prohibited use.

Compare the Best ALE Coverage From Benzinga’s Top Renters Insurance Providers

Review Benzinga’s top renter's insurance providers to compare the best ALE coverage to fit your situation.

Be Prepared and Claim Your ALE When Needed

Many homeowners and renters are unaware of the additional living expense coverage included in their homeowners, renters or condominium insurance. But ALE can provide money to keep your family going if disaster strikes and damages your home. You can get reimbursed for expenses until repairs are completed and you can move back home.

Frequently Asked Questions