What is Additional Living Expense (ALE) Insurance
Additional living expense (ALE) insurance refers to coverage under a homeowner's, condominium owner's or renter's insurance policy that covers the additional costs of living that are incurred by the policyholder should they be temporarily displaced from their place of residence. Such coverage is usually amounts to about 10 to 20 percent of the insurance that covers the dwelling.
BREAKING DOWN Additional Living Expense (ALE) Insurance
Additional living expense insurance can cover things like the increase in a monthly food bill due to having to eat out at restaurants or even the loss of income that might be incurred if the insured person were renting out part of their dwelling to a tenant. Essentially, the insurance is intended to cover the insured person for the extra expenses he or she may incur due to being temporarily displaced from their home, such as with a fire or flood.
How Additional Living Expense Insurance Works
Suppose, for example, a tornado leaves a policyholder's home uninhabitable, requiring them to relocate for a few months while it is repaired. Additional living expense coverage may also help pay for costs that exceed typical living expenses, such as hotel bills or restaurant meals, while they're unable to live in your home. Some of the other items provided for under ALE coverage may include:
- Costs of doing laundry: If you have to send your laundry out because you don't have access to a washer and dryer at your temporary home, then it may be covered, for example
- Furniture rental: Costs to rent special items you are usually used to having may be covered and considered
- Storage costs for contents under special circumstances
- Moving or displacement costs
- Pet boarding
Although the above costs may be covered by ALE, there will always be an assessment on how claimed costs compare to the normal costs of a policyholder's lifestyle because additional living expenses are meant to cover the difference between what you normally pay and what you now have to pay, due to the fact you're not living at home.
What Additional Living Expense Insurance Doesn't Cover
Additional living expense coverage won't pay for damage to your home or belongings, but those should be covered by other elements of the associated insurance policy. The dwelling coverage in a homeowners insurance policy, for example, may help pay to repair physical damage to a policyholder's home caused by a covered peril, like a fire or windstorm. Personal property coverage – which is a standard part of most homeowners, condo and renters' insurance policies – may help pay to repair or replace belongings damaged by a covered peril.