When a covered loss makes your home uninhabitable, your homeowners policy's Additional Living Expense (ALE) coverage — sometimes called Loss of Use — pays for the increased costs of living elsewhere during recovery. It's one of the most valuable and most underutilized coverages in a major claim. Here's how it works, what it covers, and how to use it correctly.
What ALE coverage pays for
ALE covers the increase in your living costs caused by being displaced from your home. The key word is "increase" — ALE is not a blank check for whatever housing you want. It covers what you spend above what you would normally spend if you were living at home.
Covered expenses typically include:
- Temporary housing. Hotel costs, short-term rental, or furnished apartment costs — whatever is comparable to your pre-loss living situation. The insurer will look for housing comparable to your home in size and quality, not a luxury upgrade.
- Increased food costs. If you're in a hotel without a kitchen, the difference between what you'd normally spend on groceries and what you now spend on restaurant meals is covered. Keep receipts for meals.
- Laundry. If your normal washer/dryer is unavailable, laundry costs are covered.
- Storage. Costs to store belongings displaced from your home.
- Pet boarding. If your temporary housing doesn't allow pets.
- Mileage. If your temporary housing is further from work or school than your home, the additional mileage cost may be covered.
Coverage limits and time limits
ALE coverage has two types of limits that work independently or together:
Dollar limit: A maximum total amount for ALE claims, expressed as a dollar amount or as a percentage of dwelling coverage. Common limits are 20–30% of dwelling coverage. On a $250,000 dwelling, that's $50,000–$75,000 in ALE coverage.
Time limit: ALE coverage runs until the home is repaired or rebuilt — or until the dollar limit is exhausted, whichever comes first. Some policies also have a maximum time period (12 months, 24 months). After a major fire, reconstruction can take well over a year. Make sure your coverage period is adequate.
My own displacement lasted well over a year. Understanding the time limit early — and tracking cumulative ALE spending against the limit — is important for planning. If you're burning through your ALE limit faster than reconstruction is progressing, that's a problem to address with your insurer before the limit is exhausted.
The documentation requirement
ALE is only as valuable as what you can document. You need receipts for everything you're claiming — hotel bills, restaurant receipts, laundry receipts. The insurer will request documentation before paying ALE claims, and undocumented expenses won't be reimbursed.
Keep a running log: date, category, amount, receipt. A simple spreadsheet works. At the end of each month, compile the receipts and submit for reimbursement. Don't wait until the end of the displacement to submit — that's a mountain of paperwork and a cash flow problem.
Also keep records of what you paid for housing before the loss. Your normal rent or mortgage payment is your baseline. The insurer pays the difference between what you normally spend and what you're forced to spend because of the displacement.
Finding temporary housing that works
The insurer will approve temporary housing that is "comparable" to your pre-loss home — similar size, similar neighborhood quality, similar amenities. You don't have to stay in the first hotel you find. For longer displacements, a furnished apartment or extended-stay hotel is usually more comfortable and may be less expensive per day than a hotel.
Coordinate housing choices with your insurer before committing. A short call confirming that the housing you're considering falls within ALE parameters prevents disputes later.
For a major fire damage claim in Georgia, ALE is often a six-figure coverage component over the life of the claim. Treating it seriously from day one is worth the administrative effort.
Related: The First 24 Hours After a House Fire: What to Do and What Not to Do — the immediate steps after a fire, including activating ALE coverage.