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Home Insurance and Additional Living Expenses

Your guide to Additional Living Expenses (ALE) under home insurance

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Written by Joel Kranc

What are Additional Living Expenses?

Additional Living Expenses coverage is insurance that covers the costs of living elsewhere if you are unable to live in your home. This usually occurs when your home or apartment is uninhabitable after some form of accident and your home needs repair. The coverage lasts until your home is repaired or until the policy limit has been reached.

When can you file a claim under Additional Living Expenses?

ALE claims can only be made if you are leaving your home specifically be. Coverage will not be granted if you are leaving due to inconvenience from other repairs. Lack of running water or electricity, for example, can make your home uninhabitable and would be considered grounds for ALE coverage.

Other reasons when additional living expenses coverage is triggered might be if a civil authority orders a mass evacuation, if access to your home is prohibited due to damages to a neighbour’s premises, and a recommendation was given not to return to your home for medical or health reasons.

Examples of this are things like natural disasters (earthquakes, wildfires, flooding chemical leaks etc.)

How do you receive compensation?

ALE coverage pays for expenses that are above and beyond your “normal” costs at home. It is meant to reimburse you for the extra costs to maintain the lifestyle you had before. Often, insurance companies will reimburse you by cheque as you incur them, so you don’t have to wait for a lump sum payment.

What’s not covered under Additional Living Expenses?

ALE was created to help claimants maintain their lifestyles when needed, not to help improve it.

Things not covered could include:

  • A larger temporary dwelling than the one you own
  • If you are cooking meals at your temporary location, food would not be covered as it is a normal expense. If cooking is unavailable, meals and restaurant bills would be covered.

Other items not covered:

  • Mortgage payments or property taxes
  • Wages lost due to time taken off
  • Utility bills for the owner of the property. (Typical tenant insurance covers liability up to a limit depending on your policy).
  • Usual expenses such as gym memberships, cellphone plans and transit passes

What are Additional Living Expenses coverage limits?

In many cases, total ALE coverage limits are 20% to 30% of the replacement cost coverage on your home policy. So, for example, if your home is valued in your policy as $500,000, the maximum ALE coverage would be $100,000 to $150,000.

Can you add coverage?

Typically, there is a ceiling on coverage represented by a percentage of your home’s value as listed in your policy.

Can you increase coverage limits?

Insurance companies will allow an increase in coverage limits for an additional premium

Frequently asked questions about Additional Living Expenses

Is Additional Living Expenses coverage part of my home insurance policy?

Typically, yes. Most comprehensive policies include it. ALE insurance refers to coverage under a homeowner’s, condominium owner’s or renter’s insurance policy.

Will Additional Living Expenses cover expenses beyond cost-of-living needs?

No. ALE coverage is meant to maintain your lifestyle while your home is being repaired and is meant as a temporary stopgap while you incur out of pocket expenses during a set amount of time.

Is Additional Living Expenses the same as “loss of use”?

The terms are used interchangeably but they are not exactly the same. Loss of use coverage is a standard protection in a homeowners insurance policy. Additional living expenses coverage is part of that loss of use. For example, loss of use coverage would be for a hotel stay if you are ordered out of your house because that is an additional expense you would incur. But something like mortgage payments, which are not additional expenses, would not be paid if you needed to leave your house.

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