11 Things You Need to Know About Additional Living Expense (ALE) Coverage and Home Insurance
A standard home insurance policy includes coverage for additional living expenses, or ALE.
Additional living expenses are costs you would not normally pay but are forced to pay because of a covered loss – like a house fire or tornado.
If a tornado destroyed your home, for example, your insurer is required to cover the cost of accommodation until your home is rebuilt or repaired.
Many homeowners are surprised to discover how many things fall under additional living expense coverage. Pet boarding, the cost of moving back into your home, meals out, and other items, for example, can all fall under additional living expense coverage.
Additional living expenses can add thousands to your claim – if you understand how they work or have a good public adjuster on your side. Here are 10 tips you need to know.
Ask for Money Upfront
Your insurer may offer a cash advance to cover additional living expenses. If your insurer doesn’t offer a cash advance, then you can request the insurance company to pay your hotel or accommodations directly. They often use outside vendors to help find a suitable place for you to live based on how long the repairs will take.
Some insurers provide you with a cash advance to make life easier for you in the days following a loss. In many cases, the adjuster working on your claim has the authority to distribute a cash advance directly to you.
Cash advances aren’t available with all insurance policies. Contact your insurer or check your policy to see if you could receive an immediate cash advance towards additional living expenses.
Note: This cash advance isn’t free money; it’s deducted from your final payout and counts towards your home insurance limit for Additional Living Expenses, if you have this optional coverage on your policy. However, it can help cover immediate living expenses in the days following a loss.
Don’t Expect Free Meals at Fancy Restaurants
Additional living expense coverage isn’t a free ride. If you don’t normally eat steak dinners at fancy restaurants every night, then you shouldn’t suddenly splurge on steak dinners on your insurer’s dime.
Instead, your insurer covers additional, reasonable costs you incur as a result of the covered loss – including costs related to food. And they only cover over and above what you would have normally spent on a weekly or monthly basis.
If you are staying in a hotel without a kitchen, for example, then your insurer may cover many of your meals in a restaurant when you would normally be cooking at home.
Meal expenses get complicated, and they’re a difficult part of many insurance claims. Keep all grocery, food, and dining receipts to ensure you receive the maximum possible payout for your insurance claim. The insurance company will want to see the itemized receipt, not just a payment on your credit card bill. This is to make sure that they are not paying for alcohol, tips or other person’s that are not covered under your insurance policy.
Claim Everything You Can
You pay a lot of money for home insurance. That’s why it’s important to claim everything you can.
There are obvious things to claim – like hotel accommodations, rental cars, and certain meals out.
However, many homeowners are surprised by how many other things they can claim. Some of the surprising additional living expenses your insurer may cover include:
- The cost of pet boarding.
- The cost of storing new furniture and other possessions until you move back into your home.
- The cost of moving back into your home.
- The cost of relocating scheduled events that were supposed to take place at your home (like a meeting for your home-based business).
- Any extra travel costs incurred as a result of moving to temporary accommodations – like additional mileage you’re putting on vehicles to get to school or work after moving to a hotel.
- The cost of laundry and other services you would normally perform at home.
Overall, additional living expense coverage is exactly what it sounds like: it’s coverage for additional living expenses you would not normally pay if you were able to continue living in your home.
You Can Stay with Friends or Family and Still Receive Compensation
If your home isn’t livable, then your insurer covers the cost of alternative accommodations – like a hotel.
However, you don’t need to stay in a hotel to receive compensation. You could stay with a friend or relative and still receive compensation from your insurer.
Ask your friend or relative to charge a reasonable daily rate for accommodating your family. As long as the rate is reasonable compared to hotels in the area, your insurer should be willing to pay it.
Additional Living Expense Coverage Has a Limit
Additional living expense coverage isn’t unlimited; instead, your insurer stops covering additional living expense coverage when one of two things happens:
- When your home becomes livable again (say, after it has been completely repaired or rebuilt)
- When you reach your coverage limit
Your insurer stops covering additional living expenses based on whatever item comes first. It is very important that you look at the total amount of your coverage and then divide that by the number of months it will take to repair your home. Often, when using outside companies to book your accommodations, those companies don’t look at your policy limits and you could run out of coverage.
You Can Upgrade your Policy for Unlimited Coverage
Most home insurance policies have an additional living expense limit. Once you reach this limit, your insurer no longer covers additional living expenses – even if you must continue to live in a hotel and pay additional costs.
However, there is a way to get unlimited additional living expense coverage:
- Upgrade your policy to “actual loss sustained” coverage, which requires your insurer to cover all additional living expenses without a limit
With actual loss sustained coverage, your insurer continues to cover additional living expenses until your home is rebuilt or livable again, regardless of the coverage limits of your policy. If you want maximum protection and peace of mind, then upgrading to actual loss sustained coverage could be the right choice.
Understand What Isn’t Covered
Additional living expense coverage covers additional living expenses you pay as a result of a covered loss. However, it doesn’t cover all your bills after a loss.
If you normally pay for childcare for your family, for example, then your insurer will not suddenly start paying your childcare bill, nor will your insurer cover your mortgage or utility payments.
Items not typically covered under additional living expenses include:
- Childcare costs
- Insurance premiums
- Mortgage payments
- Unlimited food or eating at restaurants excessivelyUtilities
- Many other things you normally paid before a covered loss occurred
Keep All Receipts, Invoices, and Other Proof
Insurers require proof before covering additional living expenses.
Ask for receipts from the hotel. Keep receipts from all meals out. Ask for invoices from the car rental company, and track any other additional payments you make as a result of a covered loss.
The more proof you have, the smoother your claim will go.
Get Compensated for Boarding & Storage
Your insurer’s additional living expense coverage should cover the cost of pet boarding, storage units, and other solutions.
If you are unable to keep your pet in a hotel, for example, then you may need to board your pet until your home is livable again. This is an additional expense you would not normally need to pay, and your insurer should cover it.
Similarly, if you need to store furniture (including old furniture from your house or new furniture you purchased before move-in), then your insurer should cover the cost of temporarily storing that furniture – say, in a storage unit.
Get Compensated for Moving Back Into Your Home
If your home has finally been rebuilt or repaired and you’re ready to move in, then your insurer should cover the cost of moving back in.
Insurance could cover movers, furniture delivery, and other costs related to moving back into your home. Again, these are additional costs you would not have paid if a covered loss did not occur, and they fall under additional living expense coverage.
When in Doubt, Ask Your Insurer or Public Adjuster
Your insurance company is required to cover many additional costs you incur as a result of being away from home.
Understandably, there are some grey areas, which is why it’s important to ask your insurer when you’re unsure.
How much can you claim if staying with a friend or relative? How much of each meal is “additional” beyond what you would normally pay?
When in doubt, ask your insurer. Or, if you’re working with a public adjuster, talk to your public adjuster.
Work With a Public Adjuster to Maximize Claim Payout
The best way to maximize insurance claim payout is to work with a public adjuster.
Public adjusters represent your best interests – not your insurer’s best interests. They negotiate with the insurer on your behalf, maximize claim payout, and help your claim proceed as stress-free as possible.
Contact ClaimsMate today to receive a no-cost, no-obligation consultation with a public adjuster.