Additional living expenses are an invaluable form of coverage that is typically included in your home insurance policy. It kicks in when you have to move out of your home while it's being repaired after an insured loss.
Below you’ll learn more about what additional living expenses are, how it works, and the types of coverage it provides.
Additional living expenses (ALE) provide coverage for the cost of living outside of your home while it’s uninhabitable. This coverage typically kicks in after a significant loss and damage to your home by an insured peril.
You’ll receive compensation for expenses such as accommodations and food. You will be reimbursed for expenses that are above and beyond your regular daily living expenses. The coverage will last until you can move back into your home or you reach your policy limit.
Additional living expenses (ALE) coverage only activates if you are forced to leave your home after an insured loss claim. Your home has to be determined to be uninhabitable. For example, you do not have water, or electricity, or have significant damage. It does not apply if you have repairs that are an inconvenience to you.
ALE can also apply if you receive a mass evacuation order from your municipality or government. For example, a gas or chemical leak in your neighbourhood or impending natural disasters such as wildfires or flooding.
“Additional” is the keyword when it comes to the expenses that qualify. ALE will cover costs that exceed your regular prices to live. So, it ensures you can keep the same or similar lifestyle you had previously to leaving your home.
Insurers typically reimburse you for the additional expenses you incur. You typically will submit receipts and you’ll receive a payment. You won't have to wait for a lump sum payment once all expenses have been calculated.
In terms of duration, you will receive compensation until you can move back into your home or you reach your policy limits for additional living costs.
Make sure you are protected with proper coverage for additional living expenses if your home is damaged. Get started online or give us a call.
Get startedThere are three parts to additional living expenses coverage:
Additional living expensesThis covers expenses and other costs you wouldn’t typically have while living in your own home. Here are the common expenses that are covered:
This is applicable if you rent out a portion of your home (room, basement, etc.). Your policy will pay for the rental income you stand to lose if your tenant is forced to move out of your home if it's uninhabitable.
Prohibited accessYou will receive additional living expenses if you are forced to leave your home in an emergency. For example, something happened to a neighbour’s home that threatened you. Or the government issues a mass evacuation notice.
As with all insurance, there are coverage limits. For ALE, your coverage limits are typically 20% to 30% of your home replacement cost. Let’s say your replacement cost is set at $600,000 in your policy. Your coverage limit is 25% of the replacement cost. So, your ALE limit would be $150,000 (25% of $600,000).
You may be able to increase your coverage limit for an additional premium. Speak with your insurance about your coverage limits and options.
Additional living expenses don’t mean all living expenses. This protection was designed to help people keep the same quality of lifestyle, not make it better. Here is what is not covered:
Additional lying expenses coverage applies when your primary residence becomes uninhabitable. It can also apply if you are forced to evacuate your home. These are the two main situations where this coverage applies. For more specific insurance about when ALE applies, speak with your insurance provider.
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Let's say you have a house fire. The entire main floor of your home is significantly damaged, including your kitchen. There is also smoke damage to your upper floor. There is water damage in the basement as a result of the firefighters putting out the blaze. Your home is deemed uninhabitable. In this situation, you would receive living expenses from your insurer to stay in a hotel and for meals, while your home is being replaced.
Additional living expenses coverage is typically included in your Ontario home insurance policy. So, the cost is included as part of your total insurance package.
Additional living expenses are a separate part of your home insurance claim. How the additional living expenses cash out works depends on the insurer. Some insurers prefer you accumulate expenses over time and then pay out a lump sum. Others will pay out expenses weekly or within a defined period.
You may be able to request an advantage on your ALE payments to help you cover some of the immediate costs you are facing. This amount will be deducted from the payment of the total claim. Speak with your insurer about their specific steps for additional living expenses claims.
While it's not required, it is included in most homeowners insurance policies. It's a great type of coverage that provides you with financial compensation when you’re displaced from your home.
Yes, ALE is included in most homeowners policies, including, comprehensive, broad form, and named perils. It's also included in condo insurance and tenant insurance policies. The main thing that will vary between these is policy limits, terms, and conditions.
These terms are often used to refer to the same thing, but they are slightly different. Additional living expenses are part of the more significant loss of use coverage included in your homeowner's plan.
Coverage still applies if you choose to live with friends or family, instead of a hotel or short-term rental. However, compensation will work a little differently. Your insurer will give you a daily billeting rate for adults and children. If you are staying long-term, you’ll receive a monthly rate. Speak with your insurer to learn more about how this works.
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