When a severe hailstorm struck Rebecca Beach’s home, it caused enough roof damage that water was leaking into the attic. And if that wasn’t enough of a problem, the water damage quickly turned into mold damage.
“It was unsafe for us to live in the home until the mold could be removed,” says Beach, a lifestyle and finance blogger who runs Mom Beach.
Beach and her family had to evacuate their house for a month, spending that time in a hotel. Paying for a hotel bill on top of dealing with water damage repairs and mold removal is a lot to swallow.
But there was one silver lining, Beach had additional living expenses coverage on her homeowners insurance policy.
Dealing with damage to your home is daunting. And finding replacement housing and dealing with the costs only adds to the stress. But if you have additional living expenses insurance, you could have a helping hand.
What is additional living expenses coverage and how can it help?
Say a fire wrecks your home or a storm destroys your roof to the point that you can’t live there anymore. While your home is undergoing repairs, you’d have to temporarily relocate, right?
Additional living expenses insurance is coverage that will pay for those extra costs incurred when you’re temporarily displaced from your home. It’s often part of standard renters, condo, and homeowners insurance policies.
If you find yourself unable to live in your home, additional living expenses (ALE) can help pay for costs such as hotel stays, rent for temporary housing, storage fees for furniture, and restaurant bills.
In Beach’s case, not only was she able to get reimbursed for the hotel, her insurance covered the costs of restaurant bills since the family had to eat out more than usual, due to the lack of a kitchen.
Financial help from ALE coverage can mean the difference between having your own temporary lodging and crashing at a family member’s home while you wait out repairs.
Having to find temporary digs and facing major home repairs are stressful enough, but ALE reimbursement can at least help you maintain your standard of living in the meantime.
When can I claim ALE?
There are two major factors that will influence when you can claim ALE.
You can only claim ALE coverage if a peril listed in your insurance policy damaged your home.
For example, most standard insurance policies do not include flood damage coverage. You’re only required to have it if you live in a designated flood zone. If you don’t have flood insurance and unexpected flooding damaged your home, you won’t be able to claim ALE.
If you have flood insurance through the National Flood Insurance Program, additional living expenses are not covered.
But if a major storm blows through and rips through the roof and your policy covers wind damage, then you could claim ALE while your home undergoes repairs.
How your home becomes damaged plays a big role in getting your claim approved. When Beach’s family had to relocate due to mold, they received ALE because the mold happened as a result of a hailstorm. If the mold damage occurred due to lack of maintenance, the insurance company would’ve likely denied their ALE claim.
Commonly covered disasters include:
- Falling objects
- Sudden/accidental water damage, such as a burst pipe
In addition to only covering events listed in your insurance policy, you can only claim ALE if your home is uninhabitable.
For example, say a tree crashes through the corner of your home. It might cause major damage, but if you still have running water, electricity, functioning bathrooms, and the rest of the home is fine. The insurance company would most likely deny your claim for ALE.
There isn’t a one-size-fits-all answer when it comes to determining if the home is uninhabitable. It depends on your insurer and the claim circumstances. Always contact your insurance company as soon as possible to get claim approval before you start assuming you have coverage for those extra costs.
How does ALE work?
When it comes to claims for additional living expenses, the keyword is “additional.”
Additional living expenses pays for the difference between your normal monthly expenses and the new expenses you have due to unexpected displacement.
Put simply, ALE pays for costs you wouldn’t have if disaster hadn’t struck your home, such as paying for a hotel.
Like in Beach’s case, your insurer could reimburse you for restaurant bills if you find yourself without a kitchen and now you’re eating out every day. If your temporary rental home has higher utility costs than you’re used to, ALE can cover the difference. If your commute to work is significantly longer, you could get reimbursement for the mileage.
Other expenses covered may include:
- Rent for temporary leased property
- Furniture rental
- Storage fees
- Laundry costs
- Pet boarding
You’re entitled to stay somewhere that is comparable to your standard of living. Don’t feel like you have to keep your family of three in a hotel room for six months. With that said, if you can’t live in your studio apartment after a fire, your insurance company probably won’t pay for you to live in a 5-bedroom penthouse.
When looking for temporary housing, check with your insurance company. Most will have resources to help you find places that are similar to the size and conditions you’re used to.
Limits on ALE
Before you start factoring additional living expenses, understand that most coverage will have a limit, both on how much your policy will pay for ALE and for how long.
Most policies come with a limit that is a percentage of your home insurance. The amount of coverage you get will vary based on your insurance provider and your premiums.
A standard coverage limit is 20 percent of your dwelling coverage. So if you’ve insured your home for $300,000, your ALE limit would be $60,000. And while you can pay higher premiums for longer time to spend your ALE, the standard time limit is 12 months.
To better understand your ALE limits before disaster strikes, contact your insurance agent or check the insurance declaration page on your policy.
Tips for successfully claiming ALE
Dealing with major home damage will be an ordeal on it’s own, so you’ll want to take the right steps to make additional living expenses claims as painless as possible.
Insurers will typically reimburse you for ALE rather that giving an up-front lump sum. Keep these tips in mind to ensure you’re getting the most out of your coverage.
- If something happens to your home, contact your insurer as soon as possible
- Gather proof of your regular expenses
- Keep track of any extra expenses
- Save all of your receipts
- Discuss your ALE policy and limits with an agent and document all discussions
Beach said her insurance agent was very helpful throughout the claims process. They were her direct contact for submitting reimbursement receipts. Don’t underestimate that resource.
“I really think additional living expenses insurance is worth the expense,” she says. “It’s $50 more for us in addition to our standard homeowner’s insurance.”
It’s virtually impossible to be fully prepared for a disaster. But additional living expenses coverage is a form of preparation that could make the recovery process a little more bearable.