Guide to additional living expenses insurance

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If fire sweeps through your home or a hurricane rips the roof off, you may not be able to live there for a while – possibly months – until the property is repaired or rebuilt. Additional living expenses cover the costs until you can return home again.

Also known as loss-of-use coverage, additional living expenses insurance is part of a standard home insurance policy. It pays for living somewhere else while your home is rebuilt or repaired after a disaster. The coverage pays for hotel and restaurant bills, rent and other expenses necessary to maintain your normal standard of living.

What is additional living expenses (ALE) coverage?

Additional living expenses (ALE) coverage covers the 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 that pile up while you wait for your home to be repaired or rebuilt, including:

Hotel bills
Restaurant meals
Rent from the portion of your home where a tenant lives

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.

You’ll want to keep receipts for all of your purchases to get reimbursed.

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.
These policies have limits in how much coverage they provide, 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?

Imagine your home is flooded — the damage could be significant and you may not be able to live there for a prolonged period of time. Your additional living expense coverage will reimburse you for comparable hotel accommodations. While staying at a hotel, you are also reimbursed for your meals, as long as they match your regular lifestyle.

On the other hand, if you stay at a high-end hotel or resort like the Four Seasons, additional living expense coverage will likely not be covered unless its value matches your regular monthly expenses.

But you don’t need to lower your standard of living to have living expenses covered. Public adjuster Raymond Altieri Jr., chairman and CEO of Altieri Insurance Consultants in Tampa, Florida, says he likes the idea of policyholders working with a trusted real estate agent to find a rental property that meets their needs.

“My recommendation is to get yourself into a location where you can be comfortable for the long haul,” he says. “You don’t want to be pressured into the decision.”

Additional living expense coverage also protects your personal belongings. It typically accounts for storage for undamaged belongings, such as your furniture. You also usually receive reimbursement for any clothes that you may have lost during a covered loss, such as a flood or fire.

Some of the most common additional living expense 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 owned 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 present you with 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 might be able to 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 you’re settled in a place with a kitchen, the insurer doesn’t reimburse 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 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 with your additional living expenses cash out.

Once you have accommodations covered, you should start thinking about food and storage costs. Restaurant meals matching your typical food expenses will be reimbursable to you through your additional living expenses cash out, but any lavish meals beyond your typical spending likely will not qualify.

To know exactly what is covered check with your homeowners insurance company to see any maximums that may apply.

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How to file a claim for additional living expenses

Handling the claim process properly is crucial to being reimbursed in the right amount.

Call your insurance agent or insurance company representative to learn how the additional living expense claims process works for your plan.
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. The insurance company sometimes pays you a lump sum upfront to help with expenses. But it’s more likely that you will pay for everything and later be reimbursed for the costs.
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.

If you’re considering new insurance or changing your existing home insurance, Insure.com provides an annual survey of the best home insurance companies with rankings by surveyed policyholders.

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 International Risk Management Institute says the amount of additional living expense coverage available to policyholders typically is limited to:

30% of the dwelling limit in most types of 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

Insurance.com has a quick guide that explains the difference between HO-2, HO-3, and other policies.

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. If your friends and other relatives want to protect their homes, they will need to purchase their own policy.

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.