Additional Living Expense (ALE) Insurance
Additional living expense (ALE) insurance refers to coverage under a homeowners, condominium owner's, or renter's insurance policy that covers the additional costs of living incurred by a policyholder should they be temporarily displaced from their place of residence. Some of the other items provided for under ALE coverage may include: **Costs of doing laundry** — These may be covered if, for example, you have to send your laundry out because you don't have access to a washer and dryer at your temporary home **Furniture rental** — Costs to rent special items you are accustomed to having may be covered and considered **Storage costs** — For contents under special circumstances **Moving or displacement costs** **Pet boarding** Although the above costs may be covered by ALE, there will always be an assessment of how claimed costs compare to the normal costs of a policyholder's lifestyle. Additional living expense (ALE) insurance refers to coverage under a homeowners, condominium owner's, or renter's insurance policy that covers the additional costs of living incurred by a policyholder should they be temporarily displaced from their place of residence. Additional living expense insurance can cover things like the increase in a monthly food bill due to having to eat out at restaurants or even the loss of income that might be incurred if the insured person has been renting out part of their dwelling to a tenant. ALE coverage will not pay for damage to your belongings or to the structure of your home, but those should be covered by other elements of your insurance policy.
What Is Additional Living Expense (ALE) Insurance?
Additional living expense (ALE) insurance refers to coverage under a homeowners, condominium owner's, or renter's insurance policy that covers the additional costs of living incurred by a policyholder should they be temporarily displaced from their place of residence. Such coverage usually amounts to about 10% to 20% of the insurance that covers the dwelling.
How Additional Living Expense Insurance Works
Additional living expense insurance can cover things like the increase in a monthly food bill due to having to eat out at restaurants or even the loss of income that might be incurred if the insured person has been renting out part of their dwelling to a tenant. Essentially, the insurance is intended to cover the insured person for the extra expenses they may incur as a result of being temporarily displaced from their home — say, because of a fire or a flood.
Imagine, as an example, that a tornado renders your house uninhabitable, requiring you and your family to relocate for several months until the home has been repaired. ALE coverage helps pay for costs like hotel stays and restaurant meals until you are able to return to your home. Some of the other items provided for under ALE coverage may include:
Although the above costs may be covered by ALE, there will always be an assessment of how claimed costs compare to the normal costs of a policyholder's lifestyle. This is because additional living expenses are meant to cover the difference between what you normally pay for things and what you now have to pay, due to the fact that you're not living at home.
What Additional Living Expense Insurance Doesn't Cover
ALE coverage will not pay for damage to your belongings or to the structure of your home, but those should be covered by other elements of your insurance policy. Dwelling and personal property coverage, as well as other elements like liability coverage, are standard inclusions in most homeowners policies.
Related terms:
Actual Cash Value
Actual cash value is the amount equal to the replacement cost minus depreciation of a damaged or stolen property at the time of the loss. read more
Additional Living Expense (ALE) Insurance
Additional living expense insurance covers additional costs of living incurred by a policyholder who is temporarily displaced from their place of residence. read more
Catastrophe Insurance
Catastrophe insurance protects businesses and residences against natural disasters, such as earthquakes and floods, and against man-made disasters. read more
Coinsurance Formula
A coinsurance formula is the homeowner's insurance formula that determines the amount of reimbursement that a homeowner will receive from a claim. read more
Fire Insurance
Fire insurance covers damage and losses caused by fire and is often purchased in addition to standard homeowners insurance. read more
Flood Insurance
Flood insurance is a type of property coverage that protects homeowners from water damage to the structure and/or contents of their property. read more
Hazard Insurance
Hazard insurance protects a property owner against damage caused by fires, severe storms, earthquakes, or other natural events. read more
Homeowners Insurance
Homeowners insurance covers losses and damage to an owner's residence, furnishings, and other possessions, as well as providing liability protection.. read more
Hurricane Insurance
Hurricane insurance usually refers to an extra deductible on a homeowners policy that specifically covers hurricane-related damage in high-risk areas. read more
Life Insurance Guide to Policies and Companies
Life insurance is a contract in which an insurer, in exchange for a premium, guarantees payment to an insured’s beneficiaries when the insured dies. read more