Posted On 21 Apr 2020
Additional Living Expense (ALE) is a coverage that may be included with the policy you purchased to insure your home. It applies after a covered loss when your home is considered not fit to live in. Your policy will pay the actual, reasonable, and necessary increase in your living expense to maintain your normal standard of living while you live elsewhere.
This coverage is shown on the insurance declaration page of your homeowner’s policy or the homeowner’s section of your farmowner’s policy as coverage D. It is usually expressed as a percentage of additional coverage that comes from the amount of coverage on the house itself. The most common is 20%. I have seen it as low as 10% and as high as 100% of coverage A, the insurance value on the physical dwelling itself.
ALE coverage applies for the shortest period of time reasonably required to repair or replace the loss-related damages, or when the maximum amount of coverage for ALE is paid.
When could ALE apply?
Every situation will be different, but ALE may apply in these types of situations:
- During a major storm, a tree falls on your roof and causes significant damage. While repairs are made, the home is not livable.
- A fire in the home causes major damage and as a result, the home is not fit to live in.
- A less severe fire, such as a kitchen fire, causes smoke damage throughout the home or causes extensive damage in the kitchen.
- Your water heater breaks and damages your home. Since you have no hot water and wet floors, you can’t live in the home.
- A lightning strike knocks out power to your home. You can’t live in the home because there is no electricity or heat.
- If you live in a manufactured home, a skunk could make its way underneath the home, chew the underbelly, and spray its scent. Due to the unbearable odor, you can’t live in the home.
- The threat of an impending disaster, like a forest fire, causes local authorities to require evacuation. Even though your home may not be damaged, ALE may apply because you had to evacuate the home and incurred additional living expenses in the process.
* Policy terms, conditions and amounts of coverage vary and will apply when you have a loss. Please review your policy for complete details and maximum coverage amounts. Examples given are for illustrative purposes only and are not a guarantee of coverage. These situations are examples and not a guarantee of coverage. The facts of each actual loss determine whether ALE coverage applies.
What may be considered ALE?
- Temporary housing costs, like a motel or hotel, renting an apartment, home, mobile home, or travel trailer
- Increased meal costs
- Reasonable moving expenses to and from temporary housing
- Increased utility expenses
- Increased laundry expenses
- Increased transportation expenses
- Pet boarding
Examples of items not typically considered ALE
- Replacement of belongings like toiletries and clothing
- Temporary repairs to your home
- Entertainment expenses while you stay in temporary housing
You have a loss and can’t stay in your home. What’s next?
- File a claim. Call the office immediately (585) 589-6236. We will contact your specific insurance carrier. A claims representative will contact you and talk about your loss.
- Your claims representative will discuss with you whether ALE applies to your situation.
- The claims representative will ask you for a list of your normal living expenses and what they cost.
- Keep receipts for the extra expenses you pay for while living outside your home. Give them to your claims representative according to a schedule the two of you have agreed upon. You must have the expense first, then the insurance compamy reimburses you.
- Your claims representative will subtract your normal expenses from the additional costs you incurred, calculate the amount you’re due, and issue you a payment if one is owed.
Real-life ALE examples:
Ron and Rhoda own a home in southeastern Colorado. They have two children, Chad and Carissa. Chad wants to be a chef someday and was practicing his culinary skills by making bananas flambé. Things got a little out of control and the kitchen curtains caught on fire. Flames spread to the rest of the kitchen before Chad was able to grab the fire extinguisher and put the fire out. Ron and Rhoda were not happy with the state of their kitchen, but they were happy that Chad was okay. Smoke and fire damage made the home unlivable. The family rented an apartment for $600, including utilities, for the seven nights it took to make general repairs and clean up the smoke damage. Thanks to Chad’s cooking skills, they were able to prepare food in their temporary housing so their dining expenses did not increase. They did have to pay to have some of their personal items stored, which cost $100. The family also had to pay $75 to do their laundry for the week.
Rhoda contacted their insurance company and the claims representative explained she has ALE coverage for the time her family was unable to live in the home.
Ron and Rhoda are owed the following for additional living expenses:
+ $600 for apartment
+ $100 for storage
+ $75 for laundry
– $0 for normal expenses
$775 owed to Ron and Rhoda
A real-life example from The Southcott Agency Inc. files
As many of you know, we deal with a lot of farm and agri-business insurance. We insure a horse farm that had the unfortunate experience of a small kitchen fire. The physical damage from the fire was rather small, however, the smoke damage was extensive! The smoke damage would not allow my client to live in the home.
Coverage D, Additional Living Expenses, kicked in. The insurance company moved a mobile home to the farm and set it up including complete electrical, plumbing and sewer hook ups. My client was able to live on the farm. She was able to do daily chores, give riding lessons, and look after owned and boarded horses while the insurance claim paid to fix the kitchen and clean up the smoke damage.
A covered loss has to happen first.
You have to pay the extra expense, then the insurance coverage reimburses you.
Tornado Not Kind to Weather Buff
David owns a 1996 Palm Harbor mobile home in Missouri. David, a weather buff, was caught by surprise when a tornado tore through town one night. Many of his neighbors’ homes were damaged but David seemed to get the worst of the storm. Almost the entire roof was torn off David’s home, causing rain to pour inside. David was able to put a tarp over the exposed areas once the weather cleared, but the home was unlivable until repairs could be made. David checked into a motel for the six nights and seven days it took to make his home livable at a cost of $75 per night. The motel did not allow pets so David had to board his two cats, Oliver and Gus, for seven days at a cost of $20 per day. David had additional laundry expenses of $50 and his meals were $15 per day. Typically, he spends $210 per month dining out.
David contacted his insurance company and found out that he has ALE coverage for the time he was unable to live in his home. David is owed the following for additional living expenses:
+ $450.00 for motel stay
+ $140.00 for boarding Gus & Oliver
+ $ 50.00 for laundry
+ $105.00 for food costs
– $ 48.30 for normal expenses**
$696.70 owed to David
**($210 per month x 12 months / 365 days = $6.90/day)