What Is Additional Living Expenses (ALE) Coverage?

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Additional living expenses or loss of use coverage will pay for your extra costs you might incur while you are temporarily displaced from your home due to a covered peril.
Sometimes, your home can get severely damaged to the point of making it uninhabitable. When this is the case, additional living expenses (ALE) coverage will help you pay for the extra costs of temporarily moving, such as extra rent, gas, and food expenses.
Here’s how ALE works.

What is additional living expenses (ALE) coverage?

Additional living expenses coverage is often a standard part of renters, condo, and homeowners’ insurance policies. It covers additional costs that come with relocating yourself and your family while your home gets repaired after it’s deemed inhabitable due to a disaster. 
Say there was a hurricane, and it destroyed the roof of your house. This caused water damage to kick in and the electricity to go out. In this case, your home would most likely be declared inhabitable, and your additional living expenses coverage would take over. 

Loss of use coverage

Additional living expenses insurance can pay for things like hotels, restaurant meals, mileage, and laundry. Most policies with ALE insurance will have loss of use coverage. This applies to any extra costs you incur due to a covered loss. A good way to think of it is that loss of use coverage should cover any expense you would not have if you had not moved out of your home. 
For example, you’re staying in a hotel because of the hurricane. Your room does not have a kitchen, which means that your expenditure on restaurant meals went up. And not only that, but the hotel is farther away from your job, causing your car mileage and gas expenses to go up as well. Since these expenses would not exist had you not moved out of home, this is something that additional living expenses coverage could cover.
However, it only covers the additional costs that you’re incurring. If your usual rent is $1,600 a month, but your new rent is $1,900, the insurance would pay for the $300 difference, not the full cost of your rent. 
Other costs that could be covered by the policy include furniture rental, storage fees, and pet boarding.

What’s not included with loss of use coverage?

Usually, additional living expenses coverage is around 20% to 30% of your dwelling limit amount. So, if your home is insured for $200,000, 20% of that would be $40,000—this is your policy coverage. Not only that, but these policies also have a time limit, which is usually around 12 months. 
Your insurance company will not pay for anything they consider to be “overboard.” These policies were made to help you maintain your lifestyle, not improve it. If you have a three-bedroom house, a temporary move to a six-bedroom house with a pool and a hot tub is not something your insurance will cover.
Your insurance company can help you look for something of similar condition to your home. It will make the process less complicated for you and ensure that it falls under their coverage rules. 

How to calculate loss of use

The best thing to do when using your ALE insurance is to document everything. Save, scan, and send any receipt from your usual living expenses to your insurance agent. At the same time, document and send any costs related to your relocation–this will help them compare the costs of your lifestyle to your current conditions and identify the differences.
The more information you can provide comparing the cost of your previous living conditions to your current one, the better.
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Does renters insurance cover hotel stays?

As long as you have ALE insurance and loss of use coverage on your renters insurance policy, yes, your renters insurance will cover necessary hotel stays due to a covered loss. Keep in mind that it will not cover living costs until those costs exceed your previous living costs.

What is covered under loss of use?

Loss of use can cover a wide variety of things, so long as they are additional living expenses incurred by your relocation due to a covered peril. Things that are covered by loss of use include, but are not limited to:
  • Gas
  • Temporary housing
  • Utilities
  • Meal costs
  • Pet boarding
  • Public transportation
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