Additional Living Expenses (ALE) – What is it about?

For example, a pipe breaks, a hot water tank bursts or a fire leaves your home uninhabitable, and you have to seek temporary accommodation while your home is being repaired. ALE coverage pays for additional costs associated with your having to temporarily relocate such as hotel bills or temporary rental fees, laundromat expenses, restaurant meals.

ALE coverage is triggered if your home is damaged by a covered event listed in your insurance policy. Below are perils usually covered in a standard policy:

• Water damage from a burst pipe
• Fire
• Smoke
• Falling Objects
• Windstorm
• Weight of snow, ice, or sleet
• Vandalism/Malicious Damage

The ALE coverage limit is the maximum amount that your policy will cover for additional living expenses. The dollar amount is indicated in your insurance policy and is usually a percentage of another coverage limit, for example, 10% of the dwelling/building coverage limit. Additional Living Expense coverage usually has a time frame associated with it, so you must check your policy carefully.

Additional Living Expenses coverage does not pay for:

• Damages to your personal property. For damage to your personal belongings, check your policy for personal property coverage.
• Damages to the building/structure of your property. This is covered under the Dwelling provision in your policy.

• List of costs incurred after relocation with supporting documents, usually, receipts. This establishes the new costs incurred due to the property being uninhabitable.
• List of costs incurred prior to the relocation, usually receipts or bank transactions. This establishes the baseline data upon which the additional expenses would be calculated.

For example, a windstorm caused damage to your home, to the point where it is not habitable. You had to stay at a short-term rental at a monthly rate of $3,000 for a period of 1 month. The short-term rental does not have a washing machine, so you have to spend $50 a week on laundry. Additionally, the short-term rental is farther away from the children’s schools and the your workplace, so you are spending more on fuel.

Based on the above simplified example, ALE coverage would compensate the insured for the $3,300 additional expense for the 1-month period that you had to temporarily relocate.

As discussed earlier, ALE claims requires an assessment of how claimed costs compare to the normal costs of the policyholder’s lifestyle. This is because additional living expenses are meant to cover the difference between what you normally pay for and what you now have to pay due to the fact that you had to temporarily relocate.