Tips on Accessing Your Coverage for Additional Living Expenses / Loss of Use
Foreword:
As discussed in our Guidebook entitled “Understanding Your Insurance Policy” your Loss of Use coverage - also known as Additional Living Expenses (ALE) coverage, or Bucket D - on a Homeowners Insurance policy helps cover costs when you temporarily cannot live in your home due to a covered event, like a fire or severe storm damage.
Given the nature of this coverage, the application of expenses can vary wildly from homeowner to homeowner depending on the size of the Claim and the associated impacts on their lives. Whether a claim is considered large or small typically depends on the extent of the damage and how long you'll be unable to live in your home. These scenarios might differ in the following ways:
Small Claims
In small claims, the damage to the home is relatively minor and doesn't significantly disrupt your living situation or require extended time away. Here’s what you might expect:
Short-Term Accommodation: You may only need to stay in a hotel or rental for a few days or a week. For example, if a small kitchen fire makes it difficult to prepare meals, Loss of Use can cover hotel costs or increased food expenses.
Partial Coverage of Expenses: The additional expenses you incur might be minimal. For instance, you may only need coverage for some meals or temporary accommodation. ALE typically covers the difference between your usual expenses and your temporary increased costs.
Low Impact on Daily Life: In small claims, you might still have partial access to your home. For instance, if a room is damaged but you can still live in other parts of your home, the disruption is relatively low.
Large Claims
Large claims typically involve significant damage that renders the home uninhabitable for an extended period. In these cases:
Long-Term Relocation: You might need to rent an apartment or house for several months. This could occur if a fire causes extensive structural damage, a major flood impacts most of the home, or severe storm damage leaves it unsafe for occupancy.
Broader Expense Coverage: The claim may include not only temporary lodging but also additional commuting costs, furniture rentals, utility payments, and other expenses that arise from living in a different location.
Extended Disruption: In large claims, the home may be entirely uninhabitable, meaning you cannot return until repairs are complete. The ALE coverage helps maintain your standard of living by covering the higher costs associated with living elsewhere during this time.
Key Differences
Duration: Small claims are short-term, with minimal expenses, while large claims can last weeks to months, potentially involving significant costs.
Type of Coverage: In small claims, you might only use coverage for food and temporary shelter, whereas, in large claims, you may need comprehensive assistance for rent, utilities, and more.
Impact on Daily Life: Large claims require significant lifestyle adjustments due to the complete unavailability of your home, while small claims often allow you to continue some level of occupancy.
Understanding the scale of your claim will help you anticipate what Loss of Use coverage may apply, ensuring that you receive the appropriate support for your needs.
This Book
With that in mind, this book presents a series of chapters that walks through the different types of expenses covered in the ALE section of your policy. However, given the wide range of claim sizes and associated coverages, it’s impossible to predict exactly how to apply each cost, so these areas (as with all areas) are best handled by communicating directly with your insurance company.
Our chapters are subsequently organized under costs related to Temporary Housing, Expense Changes, Moving & Storage and Home Business. Let’s help get you back on your feet…