What is ALE (additional living expenses) coverage?
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When you bought homeowners, condo or renters insurance, you did it to prepare for a disaster. You know that a fire could tear through your living space or a thief could take the belongings you care most about. Your insurance coverage protects you against these risks. But insurance does more than pay to replace your belongings or repair your home. It also offers coverage for additional living expenses (ALE).
Additional living expenses insurance steps in when the disaster your insurance covers makes it impossible for you to live in your house. As its name suggests, this portion of your policy pays for your additional living expenses after a covered peril. Let’s take a fire, for example. You don’t want to live in your house when it’s partially burned or clogged with smoke. With ALE insurance, you won’t have to. This part of your policy pays for certain costs so you can comfortably get a hotel room, eat at a restaurant and take care of your other basic needs while your home is repaired.
What is ALE?
Additional living expenses insurance is additional coverage offered by most homeowners, condo and renters insurance policies. This coverage steps in when three things happen:
- You have homeowners, condo or renters insurance.
- A covered peril (e.g., fire, vandalism, a tree falling through your roof) makes it impossible to live in the covered property.
- As a result, you incur extra living expenses.
Say, for example, that a tree falls through your roof, exposing a portion of your house to the outdoors. It’s going to take three weeks for your contractor to make the necessary repairs. During those three weeks, you’ll probably be paying more than you normally would to live comfortably. ALE steps in to reimburse you for those costs as soon as they extend past your normal living expenses.
The simplest ALE definition is insurance coverage that pays for any living costs you incur in excess of your usual living expenses because your home, condo or apartment isn’t habitable as a result of a peril covered by your insurance policy.
How does ALE insurance work?
If you wouldn’t be able to comfortably foot a weeks-long hotel bill, let alone the additional cost of eating out at restaurants or paying to park your car in a new location, it’s a good idea to have additional living expenses coverage. Most renters, condo and homeowners insurance policies already include it.
Your ALE coverage maximum usually equals a percentage of a certain part of your policy (i.e., dwelling insurance in a homeowners policy or personal property coverage in a renters or condo policy). Read your policy for the details.
It’s also important to know that ALE insurance works on a reimbursement basis. You’ll still need to pay to book your hotel and buy your meals at restaurants. Save all of your receipts so your insurer can reimburse you.
What ALE insurance covers
ALE is designed to cover a broad variety of the expenses that come with being displaced from your home or apartment. That includes the obvious, like a hotel or short-term rental so you have a place to sleep and the cost of eating at restaurants while you don’t have access to a kitchen, but it doesn’t stop there.
ALE can also cover the cost of:
- Doing laundry at a laundromat
- Extra mileage to commute if you’re staying somewhere that’s farther from your office than your home
- Pet boarding
- Moving and storage costs
- Internet connectivity at your temporary living space
- Furniture rentals for your temporary living space
The exact coverage your ALE protection offers depends on your insurer and the specific policy. Read your policy to know exactly where you have coverage — and where you don’t.
ALE insurance reimbursement
Additional living expenses insurance covers the difference between your normal living expenses and the ones you incur while you’re displaced. So, if your hotel bill is $6,200 for the month and your monthly mortgage payment is $3,500, your insurer is only going to pay for the difference of $2,700.
What ALE insurance does not cover
ALE insurance only covers your additional living expenses. You’ll need other portions of your home, condo or renters insurance policy to pay to replace your personal property or repair your living space. If you’re a homeowner, the other parts of your policy should pay to:
- Repair or rebuild the structure of your home
- Repair or rebuild other structures on your property
- Replace your personal property
When you’re a condo owner or renter, your policy should pick up where your condo building owner’s or landlord’s leaves off. Again, read your policy to know if you need more coverage.
ALE insurance coverage limits
Your insurer caps your ALE payments. With a homeowners insurance policy, you usually have ALE insurance that equals a certain percentage (often 10-20 percent) of your dwelling coverage. For renters and condo owners, ALE is usually calculated as a certain percentage of the policy’s personal property coverage. That amount is usually higher (around 50 percent) for condo owners than it is for renters (around 30 percent).
Read your policy to know how your ALE coverage works. Some policies offer the full amount of coverage but only for a set time after the covered peril occurred while others offer coverage in perpetuity but cap the amount you can be reimbursed per week or per month. If you’re worried you don’t have enough ALE insurance, talk to your insurance agent. You can usually increase your coverage amount in exchange for a slightly higher premium.
Ways to make sure you get your maximum ALE benefits paid
You want to make the most of your ALE coverage. Here are a few tips to help you maximize your payout from your insurer:
- Know your policy: Take the time to understand your coverage now so you don’t incur expenses, assuming they’re covered, only to find out your policy doesn’t extend to that area. For example, if your insurer caps the ALE coverage payout each week, it’s not a good idea to book a hotel room at a five-star resort unless you want to pick up the excess tab.
- Talk to an agent early: As soon as your home, condo or apartment becomes uninhabitable, call your insurance agent and talk through how your ALE claims process will work. Many insurers will have you submit receipts on a certain schedule using a certain system. Get information on the process right away so getting reimbursed is easier.
- Keep receipts: Save all receipts while you’re displaced from your living space, even ones for expenses that you’re not sure will be covered. It never hurts to ask.
- Submit receipts on time: Set a recurring reminder on your calendar so you always submit your receipts on the timeline your insurer requests.
What is ALE? In short, here’s what you need to know about additional living expenses insurance:
- ALE coverage is standard with most homeowners, condo and renters insurance policies.
- It steps in when you have extra expenses (e.g., hotel costs, restaurant bills) because you can’t live in your home, condo or apartment.
- ALE insurance operates on a reimbursement basis; you need to pay for things first and your insurer pays you back later.
- It’s important to read your policy to understand your coverage limits and your specific ALE meaning as far as what’s covered and what isn’t.
If you’ve purchased insurance to protect your abode, you probably already have this safeguard in place. Still, it’s worth reviewing your policy so you can know exactly how your ALE coverage protects you should you ever need to call on it.