By: Edward L. Blais, JD, CIC, CPIA

If a severe storm or fire destroys your home, your homeowner’s insurance will cover the cost of rebuilding. But what about the cost of living somewhere else while your home is being rebuilt?


Those expenses, known as additional living expenses (or ALE), are often included in homeowner’s insurance policies. In some cases, they are added coverage, so be sure to check your policy or ask your agent. 


If you’re living in a hotel room, additional living expenses will cover the added cost of paying for it. It will also take care of other additional expenses as long as they are reasonable. For example, if your hotel doesn’t have a full kitchen that serves lunch and dinner, you may need to out at a restaurant. Additional living expenses should cover those restaurant bills too – as long as they’re within reason. 


Other things that could be covered include: 


Laundry: If you have to have your laundry done at a washer and dryer service, insurance could pick up those costs. 


Furniture: If your temporary living situation involves renting furniture, your policy could pick up that expense as well. 


Storage: If your house is being rebuilt, you have to do something with the possessions that weren’t damaged. Carting everything off to a hotel may not be feasible, so storage costs are also factored in. 


Pets: Likewise, if you can’t find a pet-friendly hotel, you may have the added cost of pet boarding. 


Again, there are limits to what additional living expenses coverage will pay for. Sometimes these limits are based on a dollar amount, such as 20 to 30 percent of the coverage on your house, condo, or rental apartment. In other cases, the coverage is limited based on time. 


If you opt for “actual loss sustained” in your plan, your carrier will pay for all reasonable expenses, regardless of the amount. However, if you are concerned about potential extra costs, you may be able to add to your additional living expenses. 


While some experts recommend purchasing as much additional living expenses as you can afford, others suggest calculating what your actual expenses would be over a 60- or 90-day period and setting your coverage based on those estimates.  


Check with your insurance agent to see what is provided under your current plan, and what additional coverage might be available and needed in your situation. 


Sources: the National Association of Insurance Commissioners, Investopedia, and Bankrate