What are ALEs and What Types of Expenses Are Covered
Negotiating with an insurance company can be stressful. When a policy holder’s home is damaged by a fire or flood, their ability to put the pieces back together depends on their home insurance coverage. Homeowners are responsible for compiling a comprehensive list of damaged property, ensuring that the insurance adjuster sees the full extent of the damage done to their home, and communicating with the insurance company throughout the process. In many cases, policyholders must manage all of the heavy liftings with the claim, all while their family has been displaced. They are staying in hotels, with relatives, or in long-term rentals, and doing their best to get back to everyday life.
Understanding your home insurance policy can alleviate some of the stress of dealing with insurance companies after a house fire, wildfire, or flood. There are three major parts to your home insurance policy that affect you when your home has become unlivable and you have been displaced:
- Structure / Dwelling
- Personal Property and Contents
- Additional Living Expenses
The purpose of this article is to take an in-depth look at the Additional Living Expenses (ALEs) section. You can find more information about home insurance in our FAQs about dealing with your insurance claim as well as other resources on our website.
The Purpose of Additional Living Expenses Coverage
Addition Living Expenses coverage allows you to maintain a comparable quality of life while living outside your home during repairs and rebuilding. It is designed to keep you from struggling to find accommodation while your home is unlivable. With ALE coverage, you will not have to stay with family or suffer undue financial hardship to rent temporary accommodations.
ALE coverage can often be found in both home insurance policies and renter’s insurance. After damage to your home makes it unlivable ALE coverage can help put your finances back together.
When Do You Get Reimbursed Through ALE Coverage?
Payment scheduling will depend on your insurance company and your adjuster. Some adjusters prefer to build up a large portion of the Ale claim and pay it out after the fact. If you have a disagreement over the offer made by your insurance company, that means it could take months to get reimbursed for ongoing living expenses.
Some of the earliest and most substantial expenses your family will face after a fire are covered under Additional Living Expenses. Accommodation, food, and travel can be expensive immediately. If you are experiencing financial hardship due to the cost of accommodation and other living expenses, you can request an advance on your insurance claim. Advance payment helps you pay for expenses you’re facing now. It can help you avoid using your credit card or asking your bank for an extended credit limit. Paying for essential living expenses with a credit card can send you into debt and leave you dealing with the consequences of the fire or flood for years after you have moved back in.
The advance will be deducted from your overall ALE coverage, but it should not affect any ongoing negotiations. Requesting an advance can give your family financial breathing room to consider your options. Keep in mind that ALE payments are typically paid by reimbursing you for costs you incur, so getting the money advanced to you might still require you to keep and present receipts the way you would to request reimbursement.
How Much Will the Insurance Company Pay in Additional Living Expenses?
The key word to understanding ALE coverage is “additional.” ALE coverage will not pay for all of your living expenses while you are displaced, only those incurred above and beyond what you usually pay. Here are two examples that will help you understand what is eligible for reimbursement.
A wildfire has made your home unlivable and rebuilding will take 8 months to a year. During that time, you must still make mortgage payments to your bank or mortgage lender on your home. You were always paying those costs, so this is not covered by your home insurance policy.
However, you now need somewhere else to stay. You may have spent several days or weeks in a hotel or motel immediately after a fire before moving into a short or long-term rental. Your hotel costs and rental costs are new or additional costs and they should be covered under the ALE portion of your home insurance policy.
The average Canadian household spends about $200 per month for each individual in the household on groceries, depending on where you live. Your ordinary food budget, which you have always had to pay, is not covered under Additional Living Expenses.
During your first few days or weeks in a hotel, you may not have access to a kitchen and rely on takeout for family meals. That can quickly add up. The difference between your normal food budget and the take-out expenses is new and additional, and so it is covered under Additional Living Expenses. Keep your takeout and grocery receipts for the time you are displaced to keep track of your total food expenses.
What Is Covered Under ALE Coverage?
Expenses that are likely covered under the Additional Living Expenses portion of your home insurance policy include:
- Accommodations: Hotel stays as well as long-term rentals until your home is in livable condition;
- Food: Above your usual grocery and takeout budget;
- Moving expenses related to moving in or out of temporary accommodations;
- Travel costs, potentially including increased gas or transit usage; and
- Storage costs related to the loss of use of your home.
Additional Living Expenses coverage typically does not include expenses such as:
- Mortgage payments or property taxes;
- Wages lost due to time taken off;
- Typical utility bills including hydro, gas, internet, cable, and phone (you may want to call your utility providers to cancel these services to your home while it is under construction); and
- Usual expenses including gym memberships, cellphone plans, transit passes, etc.
Improve Your Additional Living Expenses Claim
In order to obtain a fulsome settlement, you may need to negotiate with your insurance provider. Insurance companies hire insurance adjuster companies to provide estimates on your losses. You can dispute those findings and negotiate for fair value.