In the unfortunate event that your home is destroyed by a disaster—such as a fire damaging the interior or a tornado tearing off the roof—you might not be able to live on the property for months while it is being restored or rebuilt. In this instance, you’ll need to not only pay for temporary housing for you and your family, but also food, clothes, travel expenses, and much more.
Amidst the chaos and emotional turmoil that accompanies a home disaster, it’s important to remember that, depending on your insurance, you don’t have to cover those extra costs on your own. Most insurance policies include coverage for additional living expenses (ALE), yet most people are unaware of its existence or how to effectively utilize it. In this article, we’ll discuss what you need to know about additional living expense coverage in order to alleviate the financial burden during the time of a disaster.
What is Additional Living Expense Coverage?
Additional living expenses, as the name suggests, covers the costs associated with living away from your home during the time it takes to repair or rebuild it after a disaster. ALE tends to amount to about 10% to 20% of the insured dwelling coverage on the property. This means that if your house is insured for $300,000, you may have up to $60,000 to spend on additional living expenses. This typically includes temporary housing at hotels or rentals, food costs, and transportation.
With ALE coverage, other essential costs that exceed your regular living expenses due to being displaced from your home are usually reimbursed. In order to get your money back for these things in a smooth and timely manner, it is important to keep detailed documentation, such as organizing receipts and other measures of expenses.
What Incidents Are Commonly Associated With ALE?
ALE coverage typically applies to various situations associated with natural disasters or accidents that a homeowner is not directly at fault for. While it is commonly associated with fire damage, ALE can come into play when your home becomes uninhabitable due to other covered perils or circumstances. Here are some scenarios where ALE coverage may apply:
- Natural Disasters: ALE can be triggered by natural disasters such as hurricanes, tornadoes, earthquakes, or floods.
- Water Damage: Burst pipes, plumbing issues, or severe water damage can render your home uninhabitable. In such cases, ALE can assist with temporary accommodation costs while your residence undergoes necessary repairs.
- Storm Damage: Severe storms with high winds can cause substantial damage to your home that may require repair or complete relocation.
- Structural Damage: If your home experiences structural damage due to a covered peril, such as a collapsed roof or foundation issue, ALE can help.
- Mold Remediation: Extensive mold growth resulting from water damage or improper ventilation may require you to vacate your home for an extended period. ALE coverage can help with temporary living arrangements while professional mold remediation is underway.
- Eviction or Forced Relocation: In rare instances, if you are forced to vacate your home due to reasons beyond your control, such as government orders or safety concerns, ALE coverage may apply to help cover the costs of temporary housing until you find a permanent solution.
What is Covered by ALE?
Exactly what is covered by ALE can vary depending on your unique policy and insurance carrier, but for the most part, as stated earlier, it includes housing, food, and transportation—as long as it’s reasonable. For example, if your home is destroyed and you’re forced to stay in a hotel, you’ll need to stay in one where the cost is comparable to your typical monthly spending.
This means you can’t go and book a room at a 5-star hotel or extravagant resort. The same concept applies to food. If you’re staying in a hotel or extended-stay accommodation that doesn’t have a kitchen, you can submit a claim for meals under ALE as long as they fit into your usual routine. So don’t go to a fancy seafood restaurant and order lobster five times a day—you should be eating as close to normal as you can. Typically, this entails getting a standard breakfast, lunch, and dinner, within a reasonable price range.
Most coverages come with a limit, which is the maximum dollar amount they will pay after a disaster. However, until you reach that point, ALE will cover everything from storage for furniture and other intact possessions, to buying new clothes to replace the ones that were lost in something covered like a fire or flood.
ALE will not cover the costs of things you were already routinely paying for before the disaster, such as childcare, utilities, or mortgage payments. It only covers new living costs that were created as a result of the disaster.
Some of the most common ALEs that are covered include:
- Hotel expenses
- Meals (This can’t be claimed if you have access to some sort of kitchen.)
- Rent
- Furnishings
- Transportation
- Pet Boarding (If your pet can’t stay with you during this time.)
- Laundry expenses
Steps To File a Claim for ALE
1. Review Your Insurance Policy:
After an incident occurs, it’s vital to carefully review your homeowners’ insurance policy to understand the specific details of your ALE coverage. Take note of the coverage limits, duration, and any specific requirements or exclusions that may apply. Knowing these details beforehand will help you stay organized and make informed decisions while filing your claim.
2. Contact Your Insurance Company
As soon as it is safe to do so, contact your insurance company to report the incident and initiate the claims process. Inform them about your need for temporary housing and inquire about the ALE coverage included in your policy. The insurance company will guide you through the necessary steps and provide instructions for documenting your additional living expenses.
3. Keep Detailed Records
When it comes to ALE claims, documentation is key! Keep meticulous records of all your expenses related to temporary housing, meals, transportation, and other essential living costs. Save receipts, invoices, and bills as evidence. Maintaining a thorough record will help you maximize your reimbursement and avoid potential disputes with the insurance company.
4. Consider Reasonable vs. Comparable Living Expenses
Insurance companies typically cover the difference between your normal living expenses and the additional costs you incur due to the disaster. However, it’s important to note that ALE coverage does not necessarily guarantee a one-to-one replacement of your pre-disaster lifestyle.
The insurance company will consider what is reasonable and necessary under the circumstances. It’s recommended to discuss any significant expenses from your usual living arrangements with your insurance adjuster to ensure they are eligible for reimbursement.
5. Understand Timelines and Extensions
ALE coverage has a specific duration stated in your insurance policy. Make sure you understand the time limits to find a suitable long-term housing solution or rebuild your home within the given timeframe. If you encounter delays or unexpected challenges, communicate with your insurance company to explore the possibility of an extension.
6. Seek Professional Advice
Navigating the insurance claims process can be complex, especially during distress. Consider seeking professional advice from a public adjuster to ensure you receive the maximum benefits entitled to you under your policy.
How Fortitude Can Help
At Fortitude Public Adjusters, we are experts on disaster insurance claims, and understand how insurance companies put a value on property damage and what loopholes they are trying to find within your coverage. We will work on your behalf to help you prepare, file, and adjust your claims so that in the event of a disaster, you don’t have to spend any more time or energy stressing out over the complicated nuances of your policy.
Contact us today for a free consultation! We’re here to help you get the money you deserve.
