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Additional Living Expense: More Than Just Rent

Additional Living Expense: More Than Just Rent

After a loss, most policies have coverage that provides additional living expenses to the insured. Additional living expenses (ALE) is the coverage under a homeowner’s, condominium owner’s, or renter’s insurance policy that covers the additional costs of living that the policyholder incurs if the loss temporarily displaces the insured from their place of residence.

There are two important caveats here. First, it is the ADDITIONAL amount an insured spends to maintain the normal standard of living. Second, the loss must actually be INCURRED. The additional amount means the insurance company does not pay for your normal standard of living and also the additional amount you are spending. So, if you normally spend $500 a month on eating out and with your loss you are now spending $600, the insurance company only owes $100. This is because you would have spent the $500, regardless of whether you had a loss or not.

The second caveat is that the amount must be incurred. Hence, if a family member is letting you live in their home for free while you are rebuilding the home the insurance company is not responsible to pay. The only party that benefits from this type of arrangement is the insurance company. If you have insurance and the way to get Additional Living Expense payments is to incur the expense then you should make arrangements to do so.

If your family member is trying to “do you a favor” by not charging. they are actually doing the insurance company a favor even though you have paid premiums for this coverage. One area that we help our clients to reap the awards of additional living expense is on is mileage under this coverage. Most people do not realize that if their temporary home is farther from their work and school they have the right to claim the mileage incurred over the normal expenses that would be paid.

If you typically drive 10 miles one way to get to work from your home and you are now driving 13 miles one way from the temporary home, you should be able to claim 6 miles extra days at the IRS standard mileage rate. Currently, that amount is 57.5 cents a mile. Mileage can add up. If in the example above, the insured was out of their home for 6 months while their home is being repaired, they would be due an additional $435. Imagine if your partner’s work and kid’s schools are farther away too! Additional Living Expenses is an important coverage that is often underutilized. When you have a loss think of all the expenses that you wouldn’t have had if you did not have the claim. Some examples are lawn care at the home and temporary home, pet boarding, and laundry if the temporary home does not have a washer and dryer.

Brown – O’Haver’s public insurance adjusters have been trained to look for additional expenses that our clients may not have thought to submit for payment.

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