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 help to cover your 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 the costs of living somewhere else while your home is being 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.

Best Home Insurance Offers For You image
Valid zip code required
Get Quotes

"Normal" is the keyword. Don't expect an insurer to put you up in a mansion if you live in a bungalow.

Let's dive into what ALE coverage is, what it covers and doesn't cover and how to make a claim for additional living expenses.

What is additional living expense (ALE) coverage?

Additional living expenses (ALE) coverage helps to pay for 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 over and above 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 in order 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?

Additional living expenses insurance reimburses you for costs you incur that allow you to maintain a standard of living comparable to how you lived before a covered loss damaged your home.

For example, if you need to stay in a hotel and eat meals in restaurants, this type of coverage reimburses you for expenses that exceed your normal costs when you live at home.

What are some additional living expense examples?

Some of the most common ALE coverage examples include:

Restaurant meals

You can claim extra expenses for eating out if you don't have access to a kitchen. 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.

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.

Hotel

Hotel accommodations should be comparable to your lifestyle. Hickle says 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. Typically, they don’t want you to stay at a hotel for more than 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.

But 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 your 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."

You don't have to accept a two-bedroom apartment if you live in a four-bedroom, three-bath house with a pool and three-car garage, says Altieri.

On the other hand, unreasonable pickiness could delay getting settled. "Thirty days in a hotel gets old real fast," he observes.

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, perhaps the children can no longer take the school bus, and you and your spouse have to drive farther to work. You can claim mileage expenses for the extra distance you drive, Altieri says.

You can also claim utility expenses that are 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.

When do you need ALE insurance?

Additional living expenses coverage is vital when your home is destroyed or otherwise made uninhabitable for a period of time. For example, perhaps a tornado zips over your home and makes it structurally unsound. Or, a fire burns your home to the ground.

In both cases, you will need to live elsewhere, at least temporarily. Living expenses can add up fast. Additional living expenses coverage can help reimburse these expenses.

There are other situations where this coverage may be valuable. “Most insurance policies also cover additional living expenses if you are under a mandatory evacuation and are unable to live in your house,”  Walker says. This might occur during a wildfire or hurricane, she notes.

How does additional living expense insurance work?

If your home no longer is inhabitable due to a covered loss, call your insurance agent or insurance company representative to learn how the additional living expense claims process works.

The agent or representative is likely to help you 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 the schedule on which to do it. In some cases, the insurance company may pay you a lump sum upfront to help with expenses. But it’s more likely that you will both incur the expense and pay for it before you are reimbursed for the costs.

Insurers do their best to be fair, Hickle says, but sometimes misunderstandings arise. Many homeowner insurance policies include dollar limits for additional living expenses. Hickle says some policyholders mistakenly think they're entitled to the maximum amount, regardless of what they actually spend.

To avoid problems, understand what homeowners insurance covers, keep your receipts organized and obtain written authority from the insurance company before making any big-ticket expenditures, Altieri says.

He 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 ALE 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 expenses 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

However, these are guidelines. Insurance companies may offer more or less coverage than what you see above.

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 length of time.

How to claim additional living expenses?

Handling the claim process properly is crucial to being reimbursed in the right amount. So, make sure you properly track and submit your expenses.

“Keep receipts for expenses that may be reimbursed if you file a claim,” Walker says.

How to track ALE

As you incur expenses, it may help to keep them in a file in chronological order and to include a note on the back of the receipt describing the exact nature of the expenses you incurred.

It is important to make sure your receipt is clear and legible, with the amount clearly defined. If you incur an expense but do not get a paper receipt, ask that one be sent to you via email.

If you go to a restaurant with other people, make sure you get a separate receipt for your meal only.

Before you submit your receipts, make sure you have copies of the receipts for your records.

How will an ALE claim payout work?

The process for filing an additional living expenses claim varies from insurer to insurer. Generally, you will incur and pay for your expenses, submit a claim and receive reimbursement.

But the exact procedure may differ for your insurer. So, make sure you consult with your insurance agent or a company representative so you know exactly how the process will unfold.

Frequently asked questions

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.