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Most home insurance policies come with certain standard coverages, many of which you may not be familiar with. One of them is additional living expenses coverage, which is often abbreviated as ALE or known as loss of use coverage. This coverage kicks in if you’re forced to leave your home due to a covered loss, such as a fire. Understanding ALE in your insurance can help you determine how much coverage you need and when you can file a claim.
What are additional living expenses?
Additional living expenses coverage pays for expenses incurred by being forced to leave your home after your claim for a covered loss has been approved. These policies typically cover excess living expenses incurred due to events such as fire or natural disasters. They may also cover your home if it becomes uninhabitable due to the loss of essential living amenities such as heat. Keep in mind that this policy only covers additional expenses, not regular expenses. For example, if you stay in a hotel for a month, your homeowners policy will cover the hotel bill, but not the mortgage or electricity bills for your home.
Coverage limits and details for additional living expenses vary by insurance company. Check with your insurance agent or read your homeowners insurance policy to see what your loss of use coverage is. In addition to dollar limits, ALE policies may also have limitations on how long they will pay for additional expenses.
What does additional living expenses include?
Coverage for additional living expenses varies by insurance company, but generally, additional food, transportation, and housing expenses will be covered as long as they are deemed reasonable. If you submit receipts from a 5-star restaurant, your home insurance company may not want to cover you. Insurance companies may want to see credit card and bank receipts to understand your spending prior to the covered event.
Examples of additional living expenses include:
- Food expenses that exceed what you would normally pay
- Laundry fee
- Pet care
- Temporary rental housing
- Hotel Accommodation
- Additional fuel costs
- Rental car and other transportation costs
- Storage fee
- Moving expenses
What does Supplemental Living Expenses Coverage not cover?
Supplementary Living Expenses coverage does not cover current expenses that you already owe, such as child care, insurance, mortgage, food, utilities, etc. As a general rule, you should not claim on expenses that you paid on a day-to-day basis before the covered event occurred. Supplementary Living Expenses coverage also applies only if your home becomes uninhabitable because of a covered peril. Floods and earthquakes are generally not covered because they require separate insurance.
Claimants must keep detailed records such as mileage and transaction receipts to submit when claiming for reimbursement. Failure to provide proof of expenses may result in the claim not being covered.
How much extra living expenses coverage do you need?
Supplemental living expenses coverage typically defaults to a rate of 20-30 percent of your dwelling coverage, so you don’t have to choose an amount of coverage. However, if you want, you can increase the amount of coverage or choose a level called “actual loss.” This means there is no set amount for coverage, and the insurer agrees to pay all reasonable expenses.
Because you can’t predict what kind of disaster you’ll experience or how long you’ll be evacuated, some financial experts recommend purchasing additional living expenses coverage that you can afford. Other insurance experts recommend keeping track of hotel bills, rent, restaurant meals and other anticipated expenses and calculating how much you’ll need for 30 to 60 days of evacuation.
learn more: Affordable Home Insurance Company
How to claim additional living expenses
Most insurance companies provide ALE relief on a reimbursement basis, so recording your expenses is of utmost importance. Each company has its own process, but submitting a claim typically looks like this:
- Contact your insurance company as soon as a loss occurs. Ask for a written list of what your Supplementary Living Expenses coverage will cover.
- Keep all receipts for hotels, meals, and other expenses while you are evacuating. Keeping receipts in chronological order may speed up the claims process.
- Include notes for your claims agent explaining each expense – this will make it easier for them to verify if an expense is covered and will save you a lot of time later.
- Follow your insurance company’s instructions to submit receipts, which you may be able to submit in person or online.
Once your claim has been submitted, you will receive a check for your approved ALE fees.
