Guide to additional living expenses insurance

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Also known as loss-of-use coverage, additional living expenses insurance is part of a standard home insurance policy. It reimburses the cost of living elsewhere while your home is rebuilt or repaired after a covered loss.

The coverage pays for hotel and restaurant bills, transportation and other expenses necessary to maintain your normal standard of living.

There are limitations to this coverage, and it’s important to understand how it works so you don’t wind up with unpaid bills.

What is additional living expenses (ALE) coverage?

Additional living expenses (ALE) coverage covers the extra costs of living away from your home when the structure is damaged and temporarily uninhabitable due to a covered loss. This type of coverage reimburses you for the expenses of living elsewhere you wait for your home to be repaired or rebuilt.

With ALE coverage, you are reimbursed for costs exceeding your usual living expenses.

“Additional living expenses coverage is typically included in homeowners and renters insurance policies,” says Carole Walker, executive director of the Rocky Mountain Insurance Information Association.

It’s important to note that ALE only applies to a covered loss. You can’t use it if you’ve moved out due to remodeling or repairs not related to a covered claim.

Key Takeaways

Home insurance loss of use coverage – also known as additional living expenses coverage — helps maintain your normal standard of living while your home is rebuilt after a disaster.
There are limits to ALE coverage, and how long the coverage is available.
The best way to avoid any issues when making claims is to keep all your receipts organized and get written permission from the insurers before you make any big purchase.

What is covered by additional living expenses?

Additional living expense coverage will reimburse you for comparable hotel accommodations, meals, laundry services and even transportation if it exceeds what you would normally spend.

ALE is intended to keep you comfortable and not to provide luxury above and beyond what is needed during the repairs. So, for example, the local Holiday Inn would be covered, while the Four Seasons likely would not.

If you will be out of your home for a long time, discuss the coverage available with your insurance adjuster so that you can find a place to stay that works for your family. That may include a short-term rental.

“My recommendation is to get yourself into a location where you can be comfortable for the long haul. You don’t want to be pressured into the decision,” says Public adjuster Raymond Altieri Jr., chairman and CEO of Altieri Insurance Consultants in Tampa, Florida

Additional living expense coverage also covers storage for undamaged belongings, such as your furniture.

Some of the most common additional living expenses that are covered include:

Restaurant meals: You can claim extra expenses for eating out if you don’t have access to a kitchen.
Hotel: Hotel accommodations should be comparable to your lifestyle. Insurance companies prefer to place policyholders in high-quality residence hotels so people have access to kitchens and are as comfortable as possible. They also help you find a temporary home quickly to limit hotel stays to 30 days.
Laundry: Assuming you own a washer and dryer at home, you can claim expenses for laundry services while you’re staying in a hotel.
Rent: Insurers often work with companies that specialize in locating comparable rental homes and furnishings for policyholders. They usually start looking for homes in your neighborhood and then give you choices.
Furnishings: The insurance company pays for furnishing the house, usually by working with a rental company. That way, your living space is comparable to your own home.
Mileage and utilities: If the rental house is in a different neighborhood from your home, you can claim mileage expenses for the extra distance you drive, Altieri says. You can also claim utility expenses beyond what you typically paid before your home was damaged.
Pet boarding: If you have to board your pets while you’re in a hotel, the insurance company generally picks up the boarding tab.
Storage: You can claim expenses for storing some of your possessions while your house is being repaired.

However, the insurance company doesn’t pick up the whole tab, says Michael Hickle, vice president of field operations and executive general adjuster at Sill Public Adjusters in Cleveland.

For example, if you have to eat out, the insurer pays only for the amount above what you’d normally spend on food. So, your typical grocery expenses are subtracted from the amount you spend at restaurants. Once settled in a place with a kitchen, the insurer doesn’t reimburse you for restaurant meals.

How additional living expense works when you’re staying with family

How you are reimbursed when staying with a friend or relative depends on the accommodations you are staying in. You can compare your friend’s or relative’s home to that of a local hotel to calculate the nightly rate compared to a reasonable hotel stay. You can then pay your family or relatives for the use of their home.

If, while living at someone else’s home, you have to spend more on groceries than you usually do, the extra cost will be covered.

To know what is covered check with your homeowners insurance company.

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How to file a claim for additional living expenses

ALE is usually part of the claim that is opened for the initial loss, but it is paid differently. Here’s what you need to know about the loss of use portion of your claim.

As soon as you know you can’t return home, start keeping receipts. You may be in a hotel before the insurance adjuster has even reviewed the damage.
Calculate your normal living expenses so you have a benchmark for what will be reimbursed.
Ask your insurance agent or a company representative about the best way to submit your receipts and when.
Properly track and submit your expenses. Remember to keep any receipts for expenses that need to be reimbursed and ensure the receipts are legible. If you go to a restaurant with others, ensure you get a separate receipt for your meal only.
Submit a claim and receive reimbursement.

Altieri also recommends hiring a public insurance adjuster, who works on your behalf to help you prepare, file and adjust claims. Insurance company adjusters work for insurance companies, and they don’t have time to do much hand-holding through the process.

“They’re handling hundreds of files at a time. A public adjuster provides personal service,” Altieri says.

What are the coverage limits of additional living expense insurance?

Additional living coverage has limits, both in terms of the dollar amount of coverage and how long you may use the coverage.

The amount of additional living expense coverage available to policyholders typically is limited to:

30% of the dwelling limit in most homeowners policies, such as HO-2, HO-3 and HO-5.
10% of the dwelling limit for HO-8 homeowners policies
30% of the personal property limit for renters insurance policies, HO-4
50% of the personal property limit for condominium unit owners policies, HO-6

However, these are just basic guidelines. Insurance companies may offer more or less coverage.

The amount of time you are allowed to use this coverage varies from insurer to insurer and is generally referred to as the “period of restoration.” Walker says insurance policies typically will cover 12 months of additional living expenses coverage. She adds that some insurers offer up to 24 months of coverage or allow you to purchase extra coverage that will protect you for that time.

Frequently asked questions

Does homeowners insurance cover hotel stays?

Homeowners insurance does cover hotel stays, but there are some limitations. Also, keep in mind that there are maximums in the form of time and dollar allowances.

Is additional living expense coverage the same as loss of use?

Yes, “loss of use coverage” is simply a synonym for “additional living expenses” coverage. Both terms represent coverage that makes you whole during the time when you cannot live in your home.

Can my insurance company reimburse my friend or relative using my ALE coverage?

No. Unless the relative is a member of your household – such as a spouse or child – you cannot use your additional living expenses coverage to reimburse the expenses of friends or more distant family members.

Additional living expenses coverage is part of your homeowners policy, and only protects the insured home and its occupants.

Lena Borrelli

Contributing Researcher

Lena Borrelli is a freelance writer from sunny Tampa Bay who has worked with such leading industry titans as Gronk Fitness, Morgan Stanley, Wells Fargo and Simon Corporation. Her work has most recently been published on sites like TIME, Microsoft News, Bankrate, Investopedia, Fiscal Tiger, The Simple Dollar, ADT and Home Advisor.