Additional living expense (ALE) insurance is the coverage that you get under a homeowner’s insurance, which covers the extra living expenditures borne by a policyholder if they are temporarily moved away from their actual residence.
ALE insurance generally comprises up to 20% of the coverage that you get through your home insurance. The good thing is Additional Living Expense coverage is found in a majority of home insurance policies, be it of a homeowner or a renter.
ALE insurance ably takes care of two basic necessities of life namely food and shelter if you are forced to make makeshift arrangement for the same.
ALE insurance recompenses you when your monthly food expenditure increases as you start eating in restaurants or when you suffer a loss of income after a tenant vacates your property post a mishappening. The overall objective is to lower or eliminate the burden of extra expenses.
Your ALE coverage will come in handy in the following cases:
Laundry bills — You shall be reimbursed for your laundry bills if you have to get your clothes cleaned outside in the absence of a washing machine in your temporary dwelling.
Furniture rental — If you are habituated to using certain type of furniture that you just can’t make do without, you may again manage to get a refund of their rental costs.
Storage costs — Again if you are compelled to have some of your belongings housed safely in a storage place, you can succeed in getting the storage costs back through your ALE insurance.
Moving or displacement expenses
Pet boarding – The expenses you incur for the safe boarding of your pet can also be repaid.
However, just because you have ALE insurance, you should not start going overboard and spend lavishly. That’s because your insurer will do a comparison between the claimed and the normal costs. It’s this difference that additional living expenses coverage takes care of and you must always be mindful of the coverage limit.
ALE coverage won’t yield you anything if your belongings or any part of your house sustains any kind of damage. This though should be taken care of by other components of your insurance plan. Some standard inclusions in a homeowner’s policy include dwelling, personal property, and liability coverage.
In a home insurance plan, ALE can be normally be spotted in the ‘loss of use’ section.
As mentioned before, ALE coverage will generally be 20% of your home insurance cover. So, if the latter is 400,000 USD, the former is going to 80,000 USD. If you are not satisfied with this arrangement and feel you need more to maintain your erstwhile lifestyle, you can have a word with your insurer regarding raising your ALE limit.
In your discussion, you can also ask your insurer whether there is a provision for “actual loss sustained” that can cause the ALE coverage to increase beyond a certain percentage.
As mentioned earlier, if you refrain from exploiting the advantage that ALE insurance offers by thinking of staying in a resort or a five-star property, you can continue your normal style of living. You just have to find an accommodation that is not too different from yours.
Some carriers in fact are not averse to providing unlimited ALE sans any time restraint to high-end clients.
Let’s understand how an ALE coverage works. Let us imagine that a massive fire outbreak causes serious destruction to your property. You are forced to live somewhere else for a couple of months as the restoration work gets underway.
You start living in a nearby hotel and have your meals in its restaurant. The furniture that remains unharmed is shifted to a storage place and you purchase new clothes in place of those that got destroyed in the fire.
If the things that you spend on are in keeping with your normal style, you can sanguinely hope that you will be reimbursed for everything through your ALE coverage.
It will be criminal if you do not save the receipts of the expenses that you incur while living away from your main residence. Your insurer will in all probability subtract the regular expenses to determine how much your additional living expenses amount to.
You need to remember that while you spend more on the food that you have in eateries, you will also be spending less on groceries at the same time. Your insurance company will take all thus into account and recompense you accordingly.
Do not stop making payments for your mortgage, real estate taxes, and homeowner’s insurance. Even if you are not staying in your house, you must keep making these payments and it will be wrong on your part to assume that your insurer will help you with these expenses.
To file an ALE claim, the damage sustained by your property should be one that your homeowner’s insurance policy covers such as fire or water damage.
While you may get ALE coverage for water damage caused by a burst pipe, you will not be able to enjoy this privilege when there is a flood and you are enrolled in the National Flood Insurance Program. ALE sadly does not feature in FEMA. So, if your property is inundated with water post a flood, repairs are underway, and you are living somewhere else, you won’t be getting any ALE through this government plan. Private flood insurance plans though may have a provision for additional living expenses.
An earthquake is another natural calamity that is not covered by a lot of homeowner’s insurance policies; so getting additional living expenses post quake damage becomes out of question. You may either have to buy an exclusive earthquake insurance plan or get a rider added to your regular insurance. Earthquake insurance is likely to offer ALE coverage.
It isn’t only when your house is damaged and you are required to seek shelter elsewhere temporarily that your ALE insurance will come to your aid. It will also stand you in good stead when you are asked to evacuate your house because of some urgency.
When firestorms, power outages, and water crisis caused a lot of Californians to move out of their dwellings for some time, the state requested insurers to increase the time duration of their ALE coverage and prolong it beyond the normal two weeks.
In places where strong winds are commonplace or where forests literally touch the backyards of houses, ALE coverage can be granted post a mandatory evacuation but if a power outage is pre-planned and everybody is already intimated about it, one cannot hope of getting the same.
Benito Paul is an accomplished claim expert cum public adjustor who with his vast experience and expertise can help you in getting your additional living expense coverage from your homeowner’s insurance.