COVERAGE FOR ADDITIONAL LIVING EXPENSES
Understanding Additional Living Expense Coverage
Property damage is devastating and being forced to live away from your home can be just as traumatic. When the focus is on repairing and rebuilding your home, Additional Living Expense Coverage is often overlooked or forgotten about. Additional Living Expense Coverage generally falls within your homeowner’s coverage for losses caused by hurricane damage, tornado damage, water damage, or other covered damage. And if your policy provides for this coverage, it could be a financial lifesaver and a big stress relief during an emotional time.
What is Additional Living Expense Coverage?
Additional Living Expense (ALE) Coverage, sometimes referred to as Loss of Use (LOU) Coverage, is insurance coverage for any necessary expense that exceeds what you usually spend while your home is uninhabitable because of damage, repairs, or rebuild due to a covered loss. Most homeowner insurance policies provide for ALE or LOU coverage up to a certain policy limit, or percentage of a policy limit (for example, 20% of your dwelling coverage). However, to obtain ALE or LOU insurance proceeds, your home must have sustained a physical loss that is covered under your homeowner’s policy (like water damage or damage caused by fire, hurricane, tornado, etc.). Unfortunately, property damage covered under a flood policy does not usually include ALE coverage. For example, standard flood insurance policies issued by the National Flood Insurance Program (which is administered by FEMA) do not provide ALE or LOU coverage. But always be sure to check your policy and ask your agent to be sure you know your coverages and understand your rights.
If your home sustains water damage caused by a pipe burst, and you cannot live there due to the extensive damage and need to stay in a hotel for an extended period of time while your home is repaired, you could make a claim for under your ALE or LOU to pay for your hotel room under your homeowner’s policy, as long as your homeowners’ policy covers water damage from pipe bursts and provides ALE or LOU coverage. On the other hand, if your water damage is caused by a flood (rising water), and you are forced to stay in a hotel because of the extensive flood damage to your home, your homeowners’ insurance likely will not cover costs incurred during that hotel stay because flood is not covered under your homeowners’ policy (in most instances).
What kind of expenses does ALE cover?
Remember that this coverage is for additional living expenses, not all living expenses. Examples of costs normally included in ALE coverage are (this is not an all-inclusive list):
- hotel or rental costs
- mileage costs for increased travel from temporary housing to your place of employment
- pet boarding costs
- food (but only in excess of your normal grocery or restaurant bills)
- costs incurred as a result of a mandatory evacuation
Your monthly expenses that you would normally incur even without the loss to your home are not included in ALE or LOU coverage. Examples of costs generally NOT included in ALE coverage are (this is not an all-inclusive list):
- mortgage payments
- car payments
- normal utility bills
- normal cable or internet bills
Be sure to carefully read your policy to determine whether you have ALE or LOU coverage and understand what your insurance company will cover. If you have ALE or LOU coverage and intend to make a claim for ALE and LOU after a covered loss, be sure to keep organized documentation of the money you spend, including receipts and other proof of your additional expenses.
We know that dealing with your insurance company after a property damage claim can be difficult and confusing. If you feel you’re not getting paid properly, contact Mostyn Law. We are property damage attorneys who specialize in insurance law, and we are here to help you.