Additional Living Expense Coverage: AKA Loss of Use

Additional Living Expense

Just like its name, additional living expenses (ALE), also commonly known as loss of use, provides reimbursement to cover extra living costs in the events that your home is not livable due to fire or other covered perils.

This coverage is one of the six main components of homeowners insurance policy and provides essential benefits to homeowners for unexpected costs such as hotel stays and storage units. 

What Does ALE Coverage Provide?

In the event that a covered loss occurs, ALE will take care of additional expenses related to the following:

Temporary Housing

Additional Expenses for Food

Additional Cost in Transportation

Pet Boarding Cost

Moving Cost

Fair rental income

If part of your home was rented out prior to a covered loss, you may be reimbursed as part of your standard homeowners policy. Some companies may require you to add a specific endorsement onto your homeowners policy in order to include this benefit.

ALE coverage will typically cover up to 12 months of rental income loss.

How Is the Reimbursement Amount Determined?

On some policies, a predetermined fixed daily limit is specified to cover daily expenses. On other policies, there is no specified daily limit, but rather a specified period of time.

When there is no total coverage limit or daily limit specified on the policy, an assigned claim adjuster will review each case at the time of a loss and approve additional living expenses based on what is considered reasonable in each case. 

In the process of establishing reasonable expenses in the approval of reimbursements, insurance companies will consider factors such as:

convenience of location

reasonable accommodations

Reasonable Accommodation

If you were planning to stay at the Four Seasons Hotel that is 10 miles away from your home compared to the Hilton Garden Inn that is only a mile away, there is a good chance that a portion of the Four Seasons costs would not be approved.

Using the same example above, excessive room service or eating out at fine dining restaurants may also have a tough time getting fully reimbursed.

Keep in mind that your ALE coverage is designed to cover any additional everyday cost that is incurred because of a covered loss, and your claim adjuster will likely request to see meal receipts and room service invoices to evaluate whether the accommodation is reasonable.

It is always a good idea to log all expenses, no matter how small the amount is.  

In our experience, the easiest way to track expenses is to take pictures of receipts using your phone. You may also consider writing down some reference notes for these expenses using a simple notes app found in your phone.  

Transportation Cost

Another line item that is commonly covered under ALE is extra mileage or transportation expenses. When your house suffers a major loss and requires at least a few months of construction repair work, your family will have to move into a rental home or condo during the time that may be located further from work or school requiring more transportation costs.

Note that ALE coverage will take care of any extra costs of having to live away from your home due to a covered peril, but it will not cover your normal daily living expenses.

Customer Story

After a pipe burst in a customer's home that caused water to flood the entire first floor, a mitigation company was called for restoration. A team of specialists arrived with shop vacuums and commercial fans to remove water and dry out any moisture in-between walls and floors.

For moisture to be completely removed, the equipment has to be actively working non-stop for several days. During this time, not only was the noise level very high in the customer's home, but the kitchen and bathrooms were also unusable due to water shutoff.

Fortunately, the claim adjuster on this case quickly approved an immediate hotel accommodation, and our customer and his family were able to move forward with their daily activities. 

What Is the Coverage Limit For ALE?

On most policies, the specified time period of coverage is 24 months.

Your homeowners, condo, or renters policy will indicate how much and/or how long you are covered under your additional living expenses coverage.

If your policy indicates a coverage amount limit

It is important to review the coverage amount to account for fluctuation in costs of living within your area. If you live in an area where housing costs and dining options are rather expensive, it may be wise to consider a higher coverage limit. 

If your policy has both a coverage limit and a specified time period limit

If the repair or reconstruction of your home is not completed either when the total coverage amount limit is met or when the specified time period has expired, you would be responsible for any additional living expenses from that point on. 

Only one deductible applies

Once you have met the deductible amount, you should be reimbursed at the fully approved amount by your claim adjuster.