Maximize Your Additional Living Expenses (ALE) Insurance: A Comprehensive Guide

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Understanding the Importance of ALE Insurance

Additional living expenses (ALE) insurance is a type of coverage that helps pay for the cost of temporary housing and other necessary living expenses if you are unable to live in your home due to a covered loss. Depending on your insurance policy, this coverage may also be called “loss of use” coverage. Most property insurance policies contain this type of coverage to protect you against the risk that your home becomes uninhabitable after a covered loss and during the repairs of the property.

Commonly, ALE includes expenses such as hotel stays, restaurant meals, and storage fees. ALE insurance is typically included as part of a homeowner’s insurance policy, but it can also be added as a separate endorsement. It is designed to cover the additional expenses incurred while your home is being repaired or rebuilt after a covered loss, such as a fire or natural disaster. The amount of coverage provided by ALE insurance is typically based on a percentage of your homeowner’s insurance policy’s dwelling coverage.  However, check your policy as different insurance companies may have different requirements for ALE coverage.

Defining ALE Insurance and Its Coverages

Loss of Use or ALE insurance coverage encompasses various aspects, including temporary housing, hotel stays, restaurant meals, and storage fees. Typically included in a homeowner’s insurance policy, it can also be added separately for additional flexibility.

An ALE or “loss of use” Provision that you might find in your policy would look something like this:

Additional Living Expense.
If a loss by a Peril Insured Against under this policy to covered property or the building containing the property makes the “residence premises” not fit to live in, we cover any necessary increase in living expenses incurred by you so that your household can maintain its normal standard of living.

Payment will be for the shortest time required to repair or replace the damage or, if you permanently relocate, the shortest time required for your household to settle elsewhere

Notably, loss of use coverage is found in its own section of the policy and is subject to its own limits. Consequently, if you have a dwelling coverage limit, your additional living expenses will not be counted as part of that coverage payment.

Under this provision, several prerequisites must be satisfied:

  • Covered loss: You must first establish that the property damage loss is covered under the policy. If the property damage to your home is excluded, your insurance company will not provide coverage for your loss of use of the residence.
  • Residence: The property must be your residence. If you are renting the property out, or not residing in it you would not be entitled to ALE coverage. (For rental properties, you can purchase insurance that will provide you with loss of income if the property cannot be used due to covered losses)
  • Normal Standard of Living: ALE coverage is supposed to provide you with comparable accommodations to your standard of living. Thus, you may need to be prepared to argue why potential alternative accommodations are appropriate for your needs.
  • Shortest time required: ALE coverage will be paid for the “shortest” time necessary to make your home habitable again. This often creates conflicts between an insurance company’s ambitious estimates with the realities of construction which often take longer than insurance company estimates allow.

Navigating ALE Coverage Scenario

Common Situations Where ALE Coverage Applies

Additional Living Expenses (ALE) coverage plays a pivotal role in various scenarios, offering crucial financial support when homeowners find themselves displaced due to unforeseen circumstances. Common situations where ALE coverage comes into play are in the aftermath of a fire, significant water damage, or after natural disasters such as tornadoes.

What Types of Expenses are Additional Living Expenses?

If you are forced out of your house because of property damage there are a wide variety of additional expenses that you may incur. You should be asking yourself:

“Would I have this expense, If I didn’t have to move out of my house?”

If you would not have needed to incur that cost, you may claim it as additional living expenses. Such costs might include:

  • Costs associated with securing temporary housing
  • Insurance coverage obtained for belongings within a temporary rental residence (rental insurance)
  • Evaluation fee for credit checks imposed by the management company during the rental of a temporary house.
  • Additional charges on cell phone bills due to extended usage or data usage.
  • Mileage expenses incurred while traveling to and from a temporary rental house and all destinations visited for rebuild-related purposes. This may include furniture stores, fund control, and locations where construction materials need to be researched and selected.
  • Mileage Costs for additional distances. If your temporary residence is farther from the places you travel the additional costs may be covered. This would include the increased distances traveled to your place of employment, and adult and children’s extracurricular activities (school, sports, clubs, lessons).
  • Meal expenses incurred during rebuild-related activities, including visits to construction sites and shopping for replacement personal property items.
  • IT services charges to set up a new computer system at the temporary rental home.
  • Utility fees at the temporary rental property if the damaged or destroyed home.
  • New account or setup fees for utilities at the temporary rental home.
  • Costs related to photocopies and mailing expenses associated with the claim.
  • Moving expenses for moving from the temporary rental home back to your repaired home, including costs for a moving company, moving van, moving boxes, packing paper, and tape.
  • Reconnection fees for establishing services (cable, telephone, utility) at the rebuilt home.
  • Carpet cleaning expenses when moving out of a rental home, if mandated by the terms of the temporary lease agreement.
  • Costs incurred for pet boarding during the rebuilding process.
  • Storage fees for personal property that you are storing during the rebuilding process.

Calculating Coverage limits for Additional Living Expenses:

It is important to know what your coverage limits for ALE are so that you may plan accordingly. Depending on your policy the limits of ALE/loss of use coverage may be calculated differently. There are standard policy forms that this coverage to a percentage of dwelling coverage. For example, ALE coverage is subject to a limit equal to 30 percent of the dwelling limit under forms homeowners (HO) 2, HO 3, and HO 5. Under the HO 8 form HO 8, ALE is just 10 percent of the dwelling limit.

Other insurance companies use custom forms. We have seen forms that contain no limits other than the time necessary for repair.

Best Practices For Making An ALE Claim

Promptly Contacting Your Insurance Company

Contact your insurance company as soon as possible to report the loss and request ALE coverage. Your insurance company may not advise you of the availability of ALE coverage so be sure to have your policy number and other relevant information handy.

Your insurance company may be able to assist you in finding alternative accommodations. However, you should not rely on them to do so.

Maintaining Thorough Records of Additional Living Expenses

Keep meticulous records of all additional living expenses, including hotel bills, additional mileage, restaurant receipts, and storage fees to prove your ALE insurance claim. You will typically need to submit these receipts to your insurance company for reimbursement.

Follow Your Insurance Company’s Claim Submission Instructions

Different insurance companies have different processes for submitting your ALE claim. These instructions are usually not in the policy. Rather, the insurance company will provide them to you after a loss.

Navigating Disputes with Your Insurance Company

Resolving Disputes over Denial of ALE Expenses

Document the reasons why you believe expenses should be covered when you disagree with your insurance company’s refusal to cover the expense. You’ll need to be able to explain why the costs were required as additional living expenses. Without good records, this may be difficult to do.

Documenting Reasons for Disputing an Expense Denial

In case of a dispute, it’s crucial to have a well-documented record supporting your claim for coverage.
Your records serve as crucial evidence in supporting your claim. Include detailed and organized documentation of all incurred additional living expenses, such as hotel bills, restaurant receipts, and storage fees. Outline the reasons why you believe each expense is directly related to the covered loss that rendered your home uninhabitable. You can strengthen your claim by maintaining comprehensive and well-organized records. These documents serve as your evidence, demonstrating the legitimacy of your additional living expenses and reinforcing your position in the event of a disagreement with your insurance company. Remember, a well-documented record not only streamlines the claims process but also significantly enhances your chances of a favorable resolution.

Document your insurance company’s response if they refuse to cover ALE that you believe should be covered. Insist upon getting the rejection and the reasons for doing so in writing.

Understanding Limitations in ALE Coverage

Understand that ALE coverage commonly has a limited timeframe. To that end, it is crucial to promptly track and submit expenses.

Timely Expense Submission for Optimal Coverage

Due to the limited timeframe, ensure you track and submit your additional living expenses and promptly submit your expenses to maximize your ALE coverage. Your insurance company will not reimburse your expenses unless you submit them. The longer you wait to submit expenses, the greater the likelihood that you will have missed some expenses that should be covered.

Seeking Assistance with Insurance Claims

Introduction to Murdock Law, S.C.

Murdock Law, S.C. specializes in helping individuals and businesses in their disputes with insurance companies.

Contact Murdock Law, S.C. for Professional Guidance

If you feel like you are being treated unfairly by your insurance company, or you’re just not sure where to start, call the attorneys at Murdock Law. We’ll double-check your insurance policy and work with you to make sure you’re getting what you deserve on your claim. Murdock Law, S.C. helps people and businesses with their insurance claims. If you are having a dispute with your insurance company you can contact us at (844) 744-7529 or by using our contact us form.

Secure the Compensation You Deserve with ALE Insurance Strategies

By understanding ALE insurance coverage, following proper procedures, and seeking professional assistance when needed, you can maximize your compensation during challenging times. If you encounter issues with your insurance claim, Murdock Law, S.C. is here to help—contact us for guidance and support!

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