Guide to additional living expenses insurance

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When disaster strikes, the last thing you want to worry about is where you’ll live or how you’ll afford basic necessities while your home is being repaired. That’s where additional living expenses (ALE) coverage steps in. Also known as loss-of-use coverage, it is included in most homeowners insurance and renters insurance policies, ALE covers the cost of temporary living expenses while your home is being rebuilt or repaired after a covered loss. Whether you need to stay in a hotel, dine out more frequently, or incur additional transportation expenses, ALE is designed to keep your life as close to normal as possible during a challenging time.

This coverage has limitations, and it’s important to understand how it works so you don’t wind up with unpaid bills. By knowing the ins and outs of this coverage, you can ensure you’re adequately protected and avoid surprises when you need help the most.

Key Takeaways

Home insurance loss of use coverage – also known as additional living expenses coverage — helps maintain your normal standard of living while your home is rebuilt after a disaster.
There are limits to ALE coverage, and how long the coverage is available.
The best way to avoid any issues when making claims is to keep all your receipts organized and get written permission from the insurers before you make any big purchase.

What is additional living expenses (ALE) coverage?

Additional living expenses (ALE) cover the extra costs of living away from home if it becomes uninhabitable due to a covered event. This coverage reimburses you for expenses incurred while waiting for your home to be repaired or rebuilt.

It’s important to note that ALE only applies to a covered loss, meaning the damage must be due to a peril outlined in your policy, like fire, windstorm, or water damage from a burst pipe. You can’t use this coverage if you’ve chosen to move out for voluntary reasons, such as remodeling your kitchen or making repairs that aren’t related to a covered claim. Additionally, ALE doesn’t cover all expenses—only those deemed necessary to maintain your normal standard of living, so it’s crucial to understand what qualifies before relying on it. Misusing ALE coverage could lead to denied claims and unexpected out-of-pocket costs.

What is covered by additional living expenses?

Additional living expenses helps cover the extra costs of living away from home, such as renting an apartment, staying in a hotel, or paying for meals and transportation. ALE is intended to keep you comfortable and not to provide luxury above and beyond what is needed during the repairs. So, for example, the local Holiday Inn would be covered, while the Four Seasons likely would not.

If you will be out of your home for a long time, discuss the coverage available with your insurance adjuster so that you can find a place to stay that works for your family. That may include a short-term rental.

“My recommendation is to get yourself into a location where you can be comfortable for the long haul. You don’t want to be pressured into the decision,” says Public adjuster Raymond Altieri Jr., chairman and CEO of Altieri Insurance Consultants.

Additional living expense coverage also covers storage for undamaged belongings, such as your furniture.

Common expenses covered under additional living expenses typically include:

Dining out: If you don’t have access to a kitchen, you can be reimbursed for the extra cost of restaurant meals.
Hotel stays: Temporary accommodations should match your standard of living. Insurance companies often prefer placing policyholders in high-quality residence hotels, which provide kitchen facilities and a comfortable living environment. They also work to find a suitable temporary home quickly, aiming to limit hotel stays to 30 days.
Laundry services: If you typically have access to a washer and dryer at home, you can be reimbursed for laundry service costs while staying in a hotel.
Temporary rent: Insurers often collaborate with companies that specialize in finding comparable rental homes and furnishings. They prioritize locating homes in your neighborhood and offer you various options.
Furnishings: The insurance company usually covers the cost of furnishing your temporary home, often by coordinating with rental companies to ensure your living space is similar to your own.
Mileage and utilities: If your rental home is located in a different area, you can claim mileage for the additional distance traveled. Utility expenses that exceed your usual costs before the damage occurred can also be reimbursed.
Pet boarding: If your pets need to be boarded while you’re staying in a hotel, the insurance company typically covers the cost of boarding.
Storage costs: You can be reimbursed for the cost of storing your belongings while your home is being repaired.

However, the insurance company doesn’t pick up the whole tab, says Michael Hickle, vice president of field operations and executive general adjuster at Sill Public Adjusters.

For example, if you have to eat out, the insurer pays only for the amount above what you’d normally spend on food. So, your typical grocery expenses are subtracted from the amount you spend at restaurants. Once settled in a place with a kitchen, the insurer doesn’t reimburse you for restaurant meals.

How ALE coverage works when you’re staying with family

If you’re staying with family or friends after being displaced from your home, additional living expenses coverage can still help.

If you’re paying them for household expenses that go beyond what you would normally spend, such as increased utility bills or additional groceries, ALE can cover these costs.

Essentially, the bottom line with ALE is that it will cover any expenses you incur as a result of not being able to live in your own home. This means any extra costs that wouldn’t exist if you were still living at home, like a share of your host’s higher utility bills, are eligible for reimbursement under ALE.

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How to file a claim for additional living expenses

To ensure a smooth process and maximize your reimbursement, follow these steps:

Contact your insurance company: As soon as your home becomes uninhabitable, notify your insurance provider. Explain the situation and confirm that the loss is covered under your policy. Ask them about the specific documentation and information needed to file an ALE claim.
Keep detailed records: Save all receipts and invoices for expenses related to your temporary living situation. This includes costs for hotel stays, meals, laundry services, transportation, and any other additional expenses incurred. Create a log to track these costs and the dates they were incurred.
Document your normal living expenses: To demonstrate the additional costs you’re experiencing, you’ll need to provide records of your regular living expenses before the loss occurred. This helps the insurance company differentiate between your usual expenses and the extra costs covered by ALE.
Submit your claim: Once you’ve gathered all necessary documentation, submit your claim through your insurance company’s preferred method, whether online, by phone, or via email. Include all receipts, your expense log, and any other required documents.
Communicate regularly: Stay in touch with your claims adjuster throughout the process. They may request additional information or clarification on certain expenses. Promptly responding to these requests can help expedite your claim.
Follow up and review: After submitting your claim, review the insurance company’s response to ensure all eligible expenses are covered. If any items are denied, ask for clarification and provide any additional documentation if needed.

By following these steps and maintaining clear communication with your insurance provider, you can help ensure your ALE claim is processed efficiently and accurately.

Altieri also recommends hiring a public insurance adjuster, who works on your behalf to help you prepare, file and adjust claims. Insurance company adjusters work for insurance companies, and they don’t have time to do much hand-holding through the process.

“They’re handling hundreds of files at a time. A public adjuster provides personal service,” Altieri says.

What are the coverage limits of additional living expense insurance?

Additional living coverage has limits, both in terms of the dollar amount of coverage and how long you may use the coverage.

The amount of additional living expense coverage available to policyholders typically is limited to:

30% of the dwelling limit in most homeowners policies, such as HO-2, HO-3 and HO-5.
10% of the dwelling limit for HO-8 homeowners policies
30% of the personal property limit for renters insurance policies, HO-4
50% of the personal property limit for condominium unit owners policies, HO-6

However, these are just basic guidelines. Insurance companies may offer more or less coverage.

The amount of time you are allowed to use this coverage varies from insurer to insurer and is generally referred to as the “period of restoration.” Carole Walker, executive director of the Rocky Mountain Insurance Information Association, says insurance policies typically will cover 12 months of additional living expenses coverage. She adds that some insurers offer up to 24 months of coverage or allow you to purchase extra coverage that will protect you for that time.

Frequently asked questions

Does additional living expenses coverage cover hotel stays?

ALE does cover hotel stays, but there are some limitations. Also, keep in mind that there are maximums in the form of time and dollar allowances.

Is additional living expense coverage the same as loss of use?

Yes, “loss of use coverage” is simply a synonym for “additional living expenses” coverage. Both terms represent coverage that makes you whole during the time when you cannot live in your home.

Can my insurance company reimburse my friend or relative using my ALE coverage?

No. Unless the relative is a member of your household – such as a spouse or child – you cannot use your additional living expenses coverage to reimburse the expenses of friends or more distant family members.

Additional living expenses coverage is part of your homeowners policy, and only protects the insured home and its occupants.

Lena Borrelli

Contributing Researcher

Lena Borrelli is a freelance writer from sunny Tampa Bay who has worked with such leading industry titans as Gronk Fitness, Morgan Stanley, Wells Fargo and Simon Corporation. Her work has most recently been published on sites like TIME, Microsoft News, Bankrate, Investopedia, Fiscal Tiger, The Simple Dollar, ADT and Home Advisor.