Additional Living Expenses Coverage
Additional living expenses coverage provides reimbursement for temporary housing, food, pet care, storage, and more when your home is uninhabitable due to a covered loss.
Additional living expenses coverage
When a peril renders your home uninhabitable, it’s good to have something to fall back on. This is where additional living expenses coverage — sometimes referred to as ALE coverage, Coverage D, or “loss of use coverage” — comes in.
Read on to find out what’s covered by this portion of your homeowners policy and see how it can help you find your footing after a claim.
Make sure your homeowners or renters insurance covers the cost to rebuild your home, replace your belongings, pay for temporary living expenses, and protect you from liability. The right coverage limits help you avoid paying out of pocket after a disaster.[1]
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What does additional living expenses insurance do for you?
If a covered peril damages or destroys your home, additional living expenses coverage can help to pay for a number of the expenses that you incur. This is a standard part of a condo, renters, and home insurance policy and is often used to cover meals in restaurants, hotel bills and several other expenses that arise while your home is being repaired or rebuilt.
Most homeowners policies provide ALE coverage at around 20 to 30% of your dwelling coverage. If the main structure of your home is insured for $200,000, you would be entitled to approximately $40,000 in additional living expenses coverage.
Common perils that could trigger additional living expenses coverage include some of the following:
- Windstorms
- Fire and smoke damage
- Explosions
- Damage caused by the weight of snow, sleet or ice
- Vandalism
- Falling objects
- Water damage from a burst pipe
Renters insurance policies contain additional living expense coverage as well. Renters policies — also known as an HO-4 policy — provide coverage limits that usually run around 30% of your personal property limits.
This part of your renters insurance covers the same extra expenses that a homeowners policy covers, including hotel stays, restaurant bills, and other additional costs that come about.
Loss of use coverage is included in your condo insurance policy (HO-6). Since there is no dwelling portion of your policy, most insurers will set the amount you are entitled to as a percentage of your personal property coverage — typically set at 50% — that covers most of the same expenses as a homeowners policy.
Most home insurance companies will place a limit on how long this coverage will last. This varies by carrier, but upper limits typically come in at around 12 months, though they can be as high as 24 months in some cases. This can be different for condo and renters policies, so make sure to clarify this with your insurance company.
What if I rent out part of my home?
If you rent a garage apartment or spare room in a home you own, and it becomes unlivable because of a covered loss, fair rental value coverage can help replace the rent you miss out on. Usually, your insurance company will subtract things like property taxes or certain bills you’re not paying while the space can’t be used.
What counts as an additional living expense in homeowners insurance?
If you make an insurance claim for a covered loss, your insurance company will pay for many of the extra costs associated with temporary housing and many other expenses.
While each home insurance company may have different guidelines as to what constitutes an additional living expense, most will cover the following:
- Temporary housing (hotel stays)
- Rental home
- Pet boarding
- Restaurant meals
- Extra mileage if your distance to work has increased
- Storage unit costs
- Parking costs
- Public transportation
How much ALE coverage does my policy provide?
As stated above, most homeowners insurance policies provide ALE coverage limits at around 30% of your primary dwelling policy limits. However, if you have an older home that is insured under an HO-8 policy, you will face a lower percentage. The specific amount that you are entitled to can usually be found on your declaration page.
According to the Insurance Risk Management Institute (IRMI), the breakdown for specific policy types looks like this:
| Policy Type | Percentage of Dwelling Limit for ALE |
|---|---|
| HO-2 | 20-30% |
| HO-3 | 20-30% |
| HO-5 | 20-30% |
| HO-8 | 10% |
Does flood insurance include additional living expenses coverage?
Most of the time, flood insurance must be purchased through the National Flood Insurance Program (NFIP), a government flood insurance plan backed by FEMA. If you have a flood insurance plan through the NFIP, additional living expenses are not covered. But some private insurance companies do provide flood insurance. In these cases, your additional living expenses might be covered in the event of a flood, though you would need to check with your insurance provider to be certain.
Considerations for ALE coverage
ALE coverage is meant to allow you to live at — or as close as is possible — to the same standard that you enjoyed before. For these reasons, the amount of dwelling coverage you have directly impacts the coverage limits of your additional living expenses. Make sure to keep your expenses in line with your previous standard of living, or else your insurer may have grounds not to reimburse your expenses.
Each company can vary in how terms are set. If you are interested in a more affordable policy with wider coverage, The Zebra can help you compare rates from a number of top insurers.
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Additional living expenses coverage FAQs:
How much homeowners insurance do I need? Insurance Information Institute
Additional living expenses coverage. Insurance Risk Management Institute
Flooding Happens Everywhere. NFIP
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