Loss of use coverage — also called additional living expenses (ALE) — pays for the extra costs of living elsewhere when your home is uninhabitable due to a covered loss. If a fire, storm, or other covered event forces you out of your home, ALE covers hotel stays, temporary rentals, restaurant meals, and other expenses above your normal cost of living.
ALE is typically set at 20% to 30% of your dwelling coverage amount. If your home is insured for $300,000, your ALE limit might be $60,000 to $90,000. There may also be a time limit — usually 12 to 24 months. Both the dollar limit and the time limit constrain the coverage, and whichever you hit first ends the benefit.
ALE pays only for expenses above your normal cost of living. If your mortgage payment is $1,500 per month and your temporary rental is $2,000, ALE covers the $500 difference, not the full $2,000. You would still be paying your normal housing cost regardless. The same principle applies to food — ALE covers the increase, not the total.
Make sure your ALE coverage is sufficient for your area's cost of temporary housing. In expensive markets, 20% of your dwelling coverage may not last long. At Truscott, we check your ALE limits against local rental costs and make sure you would not be caught short during a displacement. Request a Truscott policy checkup and we will verify this often-overlooked coverage is adequate.