Additional Living Expense

What Does Additional Living Expense Mean?

Additional living expense coverage is an optional feature included in some homeowners’ and renters’ insurance policies. It covers the extra costs an insured individual incurs if they must temporarily relocate from their home. For instance, if a fire destroys their house, this coverage would help pay for hotel accommodations and restaurant meals until the home is rebuilt. Reviewing what a standard renters insurance policy covers is a good way to see how additional living expense fits alongside personal property and liability protection.

Insuranceopedia Explains Additional Living Expense

Additional living expense coverage is typically limited to a specific percentage of the total property coverage, such as 10% or 20%. For instance, if an insured has $100,000 in property coverage with a 10% limit for additional living expenses, the policy would cover up to $10,000 for extra living costs while the home is being repaired. Because ALE limits vary by carrier, it’s worth checking how each company handles this when you compare options on a list of best homeowners insurance companies.

Additionally, this coverage only reimburses the extra expenses incurred beyond the insured’s normal living costs. It does not cover all living expenses. For example, if the insured normally spends $2,000 per month while living at home, the coverage would only pay for costs exceeding $2,000 per month during the period they are unable to stay in their home.