- What is additional living expenses coverage?
- What does additional living expenses insurance cover?
- What isn't covered by additional living expenses?
- What makes a home uninhabitable for insurance purposes?
- How much additional living expenses coverage do you need?
- Additional living expenses examples
- Additional living expenses worksheet
- How does an additional living expenses cash advance work?
- How to make additional living expense (ALE) coverage claims
- Home insurance FAQs
What is additional living expenses coverage?
Additional living expenses insurance, also called ALE or loss of use coverage, reimburses you for extra expenses if you can’t live in your home due to a covered loss. For example, if a tornado or hurricane damages your home and temporarily makes it uninhabitable, ALE insurance will reimburse additional costs to live elsewhere.
The amount you’re reimbursed is the difference between your normal living expenses and these additional costs.
Many people don’t even realize they have additional living expenses as part of their homeowners or renters insurance policy, Walker says. But this coverage can come through for them when they need it most.
"Imagine being forced out of your home on a moment's notice due to an evacuation order, water damage, fire," she says. "Could you afford to temporarily live elsewhere with the understanding that you are still responsible for your mortgage, utilities and other household expenses?"
What does additional living expenses insurance cover?
What is covered under additional living expenses? The additional living expenses coverage on homeowners policies covers a hotel stay and any costs you incur while your home is uninhabitable and is being repaired or rebuilt after a covered loss. The coverage to keep a temporary home is meant to maintain your standard of living.
Covered costs include those that exceed your normal living expenses. ALE might reimburse you for things such as:
- Hotel or temporary rental costs
- Restaurant meals
- Storage fees
- Washer and dryer costs (laundromat)
- Pet boarding
- Mileage
What isn't covered by additional living expenses?
Additional living expenses does not cover any costs that are part of your normal expenses, such as your utility bills or normal groceries. There are also limits to how much you can spend on those expenses. ALE doesn't pay for a room at the Four Seasons; it pays for what you need to get by and only for the difference in your temporary and usual costs.
"ALE is designed to pay for out-of-pocket expenses and temporary housing similar to your current home," Walker says. "In other words, ALE will not pay for a five-star hotel or expensive dining tabs that aren't equal to your normal day-to-day expenses."
What makes a home uninhabitable for insurance purposes?
A home is uninhabitable if it's unsafe to live in or if it's damaged to the point where you can't perform everyday tasks there. Your insurance adjuster will determine if the damage is serious enough for your ALE benefits to kick in. Make sure you discuss it with your adjuster before you check into a hotel, if possible.
How much additional living expenses coverage do you need?
The limit is typically a percentage of your homeowners insurance dwelling coverage.
Standard ALE coverage is 20% of the dwelling coverage. That means if you have $200,000 of dwelling coverage, your additional living expenses coverage might be $40,000.
Additional living expenses examples
Typically, additional living expense coverage will reimburse you for any costs related to a peril listed in your insurance policy that damages your home.
"This money is designed to cover extra out-of-pocket expenses for hotels or temporary housing, car rentals and other expenses you may incur while your home is being repaired," Walker says.
For example, if a fire sweeps through your home and burns it to the ground, ALE coverage will help cover your daily living costs while the home is rebuilt. Or, if a buildup of snow causes your roof to collapse, ALE coverage can again reimburse your costs.
Other examples of covered perils that might create damage that causes ALE coverage to kick in include:
- Hurricanes
- Water damage from a burst pipe
- Vandalism
- Explosions
Home insurance policies typically include up to 12 months of additional living expenses, but some offer up to 24 months as either part of the policy or as a purchase option, Walker says.
Longer coverage can be valuable in some situations. "If you live in a high-risk wildfire or catastrophe area, it's important to consider it may take a longer amount of time to repair or rebuild your home after a disaster," Walker says.
Additional living expenses worksheet
An additional living expenses worksheet might be broken into categories of expenses, such as:
- Housing
- Utilities
- Meals
- Transportation
- Miscellaneous, including things such laundry costs
Under each of these general headings would be individual expenses. For example, under the "Utilities" heading, you might include individual entries for everything from gas and water to internet and cable TV costs.
You would note both the cost incurred and how much additional expense you incurred for each.
How does an additional living expenses cash advance work?
Unless you have a lot of savings, you might need a cash advance from your insurance company just to pay your bills. But getting such a check via your additional living expenses coverage isn’t always easy.
"Many insurers will give payment advances, but it's patchy," says Amy Bach, executive director of United Policyholders. How do you get additional living expenses cash out? "You need to ask for it, and if the adjuster says no, you need to push a little more and go up the chain."
Fortunately, insurance companies generally reimburse for expenses as they are incurred, so you don't have to wait to receive a lump-sum check at the end of the process.
Keep meticulous records of every expenditure, and save all your receipts. Get a waterproof, zippered pouch to keep them together.
"Without receipts, you don't get payment," Bach says.
How to make additional living expense (ALE) coverage claims
If your home is damaged to the point where you can no longer live in it, call your insurance company promptly.
"It's critical that one of your first calls after evacuating or suffering a loss is to your insurance carrier," Walker says.
You should document your discussions -- from the first time you call your insurance company to verify your ALE coverage. Grab a notebook or put your notes in your cellphone and jot down who you talked to, the date, the time and the details you discussed. Documentation can be critical to having a smooth claim process.
An agent or representative will help you better understand what your insurance covers under ALE and the step-by-step process for filing your claim.
Your insurer also can help you find temporary housing and explain the reimbursement options that are available to you.
Closely follow the policies and procedures that your insurer has put into place for making a claim. Doing so can help prevent unnecessary difficulties in getting your reimbursement.
"ALE is typically a separate insurance check from your home repair or personal contents claim payment," Walker says.
When can you make a claim on your additional living expenses coverage?
ALE claims can only be filed when you're forced from your home due to a covered peril or evacuation order. You can't file a claim if you move out while renovations are being done voluntarily, nor will it pay if the damage is due to an excluded peril like flooding.
Home insurance FAQs
Is additional living expenses the same as loss of use?
Yes, "additional living expenses" and "loss of use coverage" are the same thing. They are both part of what is known as "Coverage D" in your homeowners insurance or renters insurance policy.
So the additional living expenses definition is the same as it is for loss of use.
Can you get loss of use reimbursement from an insurance company when staying with a friend or relative?
Yes, it’s possible to get loss-of-use reimbursement still when staying with a friend or relative. Some costs may still be reimbursed so long as you have been forced to live elsewhere due to a covered loss, Walker says.
"Staying with friends or relatives may help you save on expenses that may not be covered," Walker says.
Does homeowners insurance cover temporary housing?
Yes, homeowners insurance policies cover temporary housing for insurance claims, as long as the claim is for a covered loss like a fire.
Does renters insurance cover temporary housing?
Yes, a renters insurance policy includes ALE coverage that works similarly to homeowners and will pay for a place to stay if you can't live in your rental home due to a covered loss.
Does homeowners insurance cover a hotel stay?
Yes, most homeowners insurance policies will cover the cost of a hotel stay if your home is uninhabitable due to a covered event, such as a fire or severe weather. However, coverage varies from policy to policy.
Generally speaking, your homeowners insurance will pay for a hotel room up to the limit specified in your policy for additional living expenses. This coverage is typically a percentage of the overall homeowners insurance policy.
