What Is Additional Living Expense Coverage?

Additional living expense (ALE) coverage can reimburse you for extra costs you incur if you are temporarily unable to stay at home after a covered peril severely damages or destroys your place of residence. It is a subset of loss of use coverage, which is included in a typical homeowners, renters or condo insurance policy.

Keep reading to learn more about additional living expense coverage including what expenses are covered and how much your insurance company may be willing to pay after a covered loss.

On This Page

• 

  What Are Additional Living Expenses?

• 

  How Does Additional Living Expense Coverage Work?

• 

  What Does ALE Insurance Cover?

• 

  How Are Additional Living Expenses Calculated?

• 

  How Do I Get Additional Living Expense Insurance?

• 

  FAQs

What Are Additional Living Expenses?

Additional living expenses are costs above your regular expenditures that arise after a covered peril damages your home and forces you to temporarily move somewhere else. You can be reimbursed for these expenses through the additional living expense (ALE) coverage portion of your homeowners insurance policy.

Some of the additional living expenses your insurance provider might cover include the following:

• Hotel stays or apartment rentals
• Restaurant meals
• Furniture rentals
• Laundromat costs
• Storage costs
• Pet boarding
• Gasoline
• Utility bills
• Daycare expenses

How Does Additional Living Expense Coverage Work?

Although the two terms are sometimes used interchangeably, ALE coverage is a subset of loss of use coverage, which may not require a deductible. That said, you will almost definitely file a dwelling coverage claim alongside your loss of use claim and you will have to pay a deductible on the dwelling claim.^[1]

Your insurance company will only cover additional living expenses if your home becomes uninhabitable.

The exact definition of “uninhabitable” can vary but you will generally qualify for ALE coverage if you lose access to basic services like water, electricity, heat and plumbing.^[2]

If your home is ever destroyed or otherwise becomes uninhabitable, you will generally have to pay for your additional living expenses out of pocket at first. However, you should then be able to submit receipts to your insurer in order to be reimbursed.

How Much Coverage Is Provided?

The loss of use coverage limit for a homeowners insurance policy is usually set at 20% of your dwelling coverage limit.^[3] For example, if the structure of your home is insured for up to $300,000, your insurance carrier may contribute up to $60,000 toward loss of use claims.

Keep in mind that ALE, fair rental value and prohibited use claims all fall under the loss of use coverage limit. Fair rental value coverage makes up for lost rent payments if a property you rent out becomes uninhabitable. It can also be used as an alternative way to measure your coverage limit, meaning your insurance company would pay you the amount your property would rent for in the current market rather than setting your loss of use coverage limit at 20% of your dwelling coverage limit.

Meanwhile, prohibited use coverage can reimburse you for additional living expenses or make up for lost rent payments if your home or rental property becomes inaccessible because of a government order or physical obstruction.

The loss of use coverage limit for renters insurance can be either a flat dollar amount or a percentage of your personal property coverage limit. If you have condo insurance, your loss of use coverage limit could be based on your dwelling coverage limit, your personal property coverage limit or a combination of the two.

What Does ALE Insurance Cover?

A standard home insurance policy can provide ALE reimbursements after your house is damaged by any peril as long as that peril isn’t listed as an exclusion in the policy. The following 16 perils are among the most common covered perils that could potentially leave your home uninhabitable.

What Isn’t Covered?

Your insurance company won’t cover additional living expenses if your home becomes uninhabitable due to wear and tear, mold or anything else that can be attributed to poor maintenance or neglect. Home insurance also typically excludes coverage for certain sudden perils like floods, earthquakes and war.

Meanwhile, ALE coverage itself does not apply to recurring payments like your mortgage or property taxes. It also won’t pay for property repairs or replacements since these are instead covered by your dwelling, personal property or other structures coverage.

How Are Additional Living Expenses Calculated?

Your homeowners insurance company will only reimburse you for expenditures that exceed your typical living expenses. For example, if you usually spend $200 per month on gasoline but end up spending $250 after temporarily moving to a hotel that is farther from where you work, your insurer might pay you $50 through your ALE coverage.

Keep in mind that your insurance provider likely won’t pay to improve your standard of living. As a result, if your apartment becomes uninhabitable due to a fire and you decide to temporarily move to a nicer apartment, your insurance carrier may not cover the increase in your rent payments.

Alongside the monetary limit for your loss of use coverage, there may be a time limit after which your insurer will stop reimbursing you for additional living expenses. For example, homeowners who buy coverage from Kin Insurance may only be able to claim ALE benefits for up to one year after their homes become uninhabitable.^[4]

How Do I Get Additional Living Expense Insurance?

ALE coverage is automatically included in a standard home, renters or condo insurance policy. To find an ideal policy, you should get quotes from three to five insurers by providing them with information such as where you live, the age of your house, the condition of your roof and how many people live in your home.

You can make this process easier by going through an insurance marketplace like SmartFinancial. Instead of contacting each insurance carrier separately, you can fill out our online questionnaire one time in order to be connected with insurance agents in your area. Enter your zip code below and we can help you get a home insurance quote at no charge.