Module 3: Additional Living Expenses

What it is and what it covers

Additional Living Expenses, also referred to as ALE or Loss of Use, is a separate insurance bucket that covers costs that you incur as a result of the disaster that are above and beyond your normal expenses. The main thing that falls into this category is temporary housing: a hotel, AirBnB, or other rental property. This bucket can have a financial or time limit, so be sure to check what applies. The best ALE policies have no financial limit, also known as “actual loss sustained.” This means there is no set dollar limit—the insurance company simply pays whatever it actually costs to keep your life running normally until your home is fixed. If you fall into this category, make sure your temporary housing is equivalent to where you were living. If you had a 2 bed, 2 bath home, insurance should pay for a 2 bed, 2 bath rental. 

Homeowners: Remember, you still have to pay your mortgage, if you have one, and then ALE will cover your temporary housing costs. 

Renters: Remember, you still have to pay your rent. For example, if your rent was $1,500, you will pay $1,500 towards a hotel, and ALE will cover the balance. Once you find a new rental, your ALE coverage will end, so keep that in mind if you aren’t planning to move back into your home once it was repaired.    

Other things ALE can cover and how to track them:

Organization is the name of the game here. You’ll want to save every single receipt and keep them as organized as possible—a simple spreadsheet is usually the best way to stay on top of it.

Since you’ll need to show what your "normal" life cost before the disaster, we’ve put together some tips below on how to calculate those baseline expenses for each category. We also recommend submitting your receipts to the insurance company once a month. Insurance companies aren't always great at explaining which bills they’ve covered or which "bucket" the money came from, so staying consistent makes it much easier to track what’s been paid and what’s still outstanding.

Read or watch the video below for more information on how to figure out what expenses can be reimbursed by ALE.

  • If you’re stuck in a hotel without a kitchen, you’ll likely be eating out a lot more, and those bills add up fast! Since this is an extra cost caused by the disaster, ALE should cover it.

    To figure out your food reimbursement, take a look at your bank or credit card statements from the two or three months before the disaster. Add up what you spent on groceries and dining out to find your normal monthly average. Once you have that number, anything you spend on food above that amount while you’re displaced is considered an extra expense. Then submit your receipts, your baseline monthly average, and the difference between the two to your adjuster for reimbursement.  

  • If your temporary home adds extra miles to your commute, those extra gas costs and wear-and-tear on your car should be reimbursable too! Since you're driving further than you normally would for work or school, you should definitely keep track of that extra mileage so you can get paid back for the difference.

    To figure out your gas reimbursement, take a look at your bank or credit card statements from the two or three months before the disaster. Add up what you spent on gas to find your normal monthly average. Once you have that number, anything you spend on gas above that amount while you’re displaced is considered an extra expense. Then submit your receipts, your baseline monthly average, and the difference between the two to your adjuster for reimbursement.

    To track your mileage, use a map app to find directions from your home to work or school that you normally drove. Then map the same route from your hotel or temporary housing. The difference in mileage can be submitted to your adjuster for reimbursement and they will likely use the current IRS mileage reimbursement rate to calculate how much you are owed.

  • For homeowners, if your utility bills at the rental end up being higher than what you were paying at your own house, ALE can cover the difference. It usually takes a few months to gather enough bills to see the pattern, so we’ll provide a spreadsheet later on to help you track everything easily. For now, just keep an eye on those bills and make a note if they seem higher than your usual costs.

Module 2

Homeowners proof of loss & mortgage implications

Module 4

The guide for renters