Additional Living Expenses Coverage

Additional Living Expenses Coverage 

Home insurance covers a lot more than people think. It's common knowledge at this point that it will reimburse you for physical damage to your home if the damage was caused by an insured peril. However, people often don't know the secondary effects of it, and how these secondary protections can stop financial burdens. 

For example, not everyone is aware that you would have personal liability insurance, protecting you in the case you are charged with certain legal charges. Another one that isn't as well known is contents insurance, which protects your most valuable personal property if it needs to be repaired or replaced. However, one that is even less known is the idea of additional living expenses coverage which is often needed if a disaster hits your home. 

What Is Additional Living Expenses Coverage? 

Additional living expenses coverage, also known as ALE coverage, is part of standard home insurance, tenant insurance or condo insurance plans. It is meant to reimburse you in the event that you need temporary accommodation while your home is rebuilt or repaired after a covered peril causes a claim. For example, if a fire heavily damages your home, it is possible that you will need some rather extensive repairs, and it might cause your home to be uninhabitable for a brief while. 

While the dwelling coverage will protect the main cost of the home itself, and your contents insurance will cover any lost possessions, it might seem like you will need to pay out of pocket for temporary living expenses, such as renting out temporary housing when the repairs or rebuilding are being done on your home. Luckily, additional living expenses coverage will cover these increases in living expenses while you get back on your feet, giving you peace of mind that even these costs won't cause you to have a financial crisis. 

How Does Additional Living Expenses Coverage Work? 

Additional living expense coverage is designed to cover the extra living expenses incurred by having to live elsewhere while your dwelling is uninhabitable. During the period of time it takes for your home to be repaired or rebuilt, it is possible you will need to pay some additional costs for things that you might normally take for granted. This would include stuff like: 

• Transportation costs, if you need to travel more for situations like living further from work than normal. 
• All accommodation costs, such as hotel bills and short-term rental costs for places that you need to stay temporarily. 
• Furniture rental, if required. 
• Cost of food, if it exceeds what would normally be paid. 
• Laundry expenses if your temporary dwelling doesn't cover it for you. 
• Pet boarding, if needed. 
• Restaurant meals on the condition that you are unable to cook at your temporary accommodation. 

Please note that this is not a complete list of items that would be covered by additional living expenses coverage .This protection is meant to keep you at the same level as far as quality of living goes, not increase it, as so many of these things it can cover are situational. 

You will also be required to prove that you did incur any costs that you claim on your policy. For this reason, it is important that you keep all receipts for any purchases made in order to verify that you paid these costs. 

If you would like to know more about what possible expenses can be covered and under which situations they would be covered, your Morison Insurance broker would be happy to answer any questions you may have. 

Who Needs Additional Living Expenses Coverage? 

Anyone who owns a home could use the protection given by additional living expenses coverage. While this might seem like it would require some extra paperwork or making a special request, there is no need to be concerned about that. Additional living expenses coverage is automatically included as a standard coverage in most house insurance policies without any added work needed from the policy holder. If you already have a house insurance policy, it is almost certain that you already have additional living expenses coverage, even if you aren't fully aware of all the details. If you would like to know more about additional living expenses coverage within your current policy or would like to know more about this type of coverage in general, please speak with your Morison Insurance Broker. 

What Does Additional Living Expenses Cover? 

Additional living expenses covers your temporary living expenses if you are no longer able to live in your home after an incident. However, the incident that caused you to be unable to live in your main dwelling must be an insured peril. If, for example, your home was deemed unlivable due to a sudden flood. In such a case, you would need to have overland water coverage to be able to have your additional living expenses coverage kick in and financially protect you. When this happens, your house must be deemed uninhabitable, as you are unable to declare this for yourself. Minor damage, such as a few damaged windows, will not allow you to make a claim and use your insurance to cover the cost of living somewhere else for a brief while. The two main reasons a dwelling would be deemed uninhabitable are direct damage and evacuation orders. 

Direct Damage 

Direct damage deals with damage done to your home as the result of a natural disaster, fire, water damage, or other peril that your home insurance policy covers. Losing something such as electricity, water, or other services deemed necessary would also be enough to have your dwelling declared uninhabitable. As a result, your additional living expenses coverage will kick in during such an event. If you are unsure as to if certain situations are covered, or what would make your dwelling be counted as uninhabitable, it is best that you speak with your Morison Insurance broker, as they would be happy to let you know. 

Evacuation Orders 

There may, unfortunately, be a point where the local government calls for an evacuation in the area where you live. This may be due to a natural disaster or another large event in which all homes within a certain area must be evacuated. This would also allow you to use your additional living expenses coverage to reimburse you for anything it covers. As this can be a much more short-term solution, often lasting a week or less, many of those who wish to take advantage of such coverage will often choose to pay hotel expenses rather than rent, as it is uncommon for landlords to provide a dwelling for such a short-term period. 

What Does Additional Living Expenses Not Cover? 

Additional living expenses, however, won't cover everything. There are limits that you must pay while your main dwelling is unavailable. It is intended to allow you to live the same standard of living when making a home insurance claim, not increase it. You cannot add in an extra expense that exists as a luxury, as the policy is only designed to provide expense coverage for living costs following unexpected events, such as a fire claim. You cannot use it as an excuse to cover an additional cost for a luxury. As a result, the following items are not covered: 

• Costs when the cause of damage was not an insured peril. 
• Food expenses exceeding what is needed, such as expensive five-star restaurant bills when there are more affordable alternatives or restaurant bills when a temporary dwelling provides a place to cook. 
• Costs of entertainment while not in your primary residence. 
• Rental costs that are far excessive than what is normally paid for, such as not covering the cost of renting a mansion for a family that lives in a residential home. 
• Mortgage payments and taxes. 
• Cellphone plans, gym memberships, and other luxuries are not considered standard costs of living. 

Please note that this list is not excessive, and other expenses would not be covered by additional living expenses coverage. If you would like a better outline of what is and isn't covered, it is recommended that you speak with your Morison Insurance broker. 

What Is The Recommended Limit For Additional Living Expenses? 

A coverage limit on additional living expenses refers to the maximum amount you can claim under that policy. For example, if your policy states that your additional living expenses coverage has a limit of $100,000, only $100,000 of your policy can be put toward ALE coverage. Many policies state that there is a maximum percentage of a plan that ALE can take up, with that amount often being around 20-30%. However, not every plan has this. 

It should also be noted that each individual prioritizes different aspects of their home insurance differently, including what percentage of their policy can be taken up by additional living expenses coverage. If you would like advice on how much of a limit you should place on your additional living expenses coverage, it is best that you speak with your Morison Insurance broker. 

How Much Does Additional Living Expenses Coverage Cost? 

There is no set cost for ALE. Since several factors could impact your additional living expenses quote, a specific price cannot be given here. It should also be noted that since ALE is not a stand-alone product, its price can be hard to nail down even after you get a quote on your homeowners insurance. Also, each insurance provider will quote you slightly differently. However, since there are factors that could impact your home insurance quote, these can often be used to get a better estimate. Some of those factors are as follows: 

• The size of your home. 
• Your home's location. 
• Your claims history. 
• The size of your deductible. 
• The style and age of your home as well as any renovations made. 
• Your credit score. 
• Amount of time you've had property insurance for. 

Please note that this is not a complete list of factors that could impact your home insurance quote and, as an extension, your additional living expenses quote. If you would like to know more, it's best that you speak with your Morison Insurance broker. 

Where Can I Get Additional Living Expenses Coverage? 

Additional living expense coverage is part of a home insurance quote. If you would like to know more about how living expenses coverage works or know more about how your specific homeowner's policy covers it, you can speak to your Morison Insurance broker. If you are currently not with Morison Insurance, you can sign up by filling out the form below or calling 1-800-463-8074 to get the insurance coverage you deserve. You'll be glad you did. 

This content is written by our Morison Insurance team. It is provided for general information only. Insurance needs differ from person to person, and this article is therefore not a substitute for professional advice about your individual insurance needs which can be obtained by speaking with a Morison broker.