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 usually amounts to about 10 to 20 percent of the insurance that covers the dwelling.
- Additional Living Expense (ALE) Insurance covers additional costs incurred if a homeowner is displaced and must pay out of pocket as a result.
- ALE coverage is included in most homeowners or renter's insurance policies.
- This covers expenses such as food and staying at a hotel until the primary dwelling is inhabitable.
How Additional Living Expense Insurance Works
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.
Imagine, as an example, that a tornado renders a policyholder's house uninhabitable, requiring them to relocate for several months until it has been repaired. ALE coverage helps pay for costs like hotel stays or meals in restaurants, until you are able to return to 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
ALE overage will not pay for damaged belongings or to the structure of your home, but those should be covered by other elements of your insurance policy. Dwelling and personal property coverage are included standard in most homeowner's policies as well as other elements like liability coverage.