There are several parts of the United States that are more prone to natural disasters than others. Texas seems to top the list as the state with the most natural disasters in recent years, and is no stranger to earthquakes, floods, tornadoes, wildfires, and hurricanes. California is the next most vulnerable as it is highly subject to floods, hurricanes, heat waves, wildfires, mudslides, and as we all know, earthquakes. According to the Federal Emergency Management Agency (FEMA), Florida is number ten on the list and has experienced over 120 natural disasters since 1953, with hurricanes being the primary type of storm. If you live in one of these states, then it is highly recommended that you invest in ALE coverage.
Additional living expenses (ALE) coverage is available within most homeowner’s policies and is intended to cover the reimbursement of expenses associated with living while your house is not habitable. Typical expenses that quality for reimbursements include rent (for an apartment or long-stay hotel), restaurant meals, storage fees, transportation (in some cases), replacement clothing (if yours were destroyed or you can’t access them), and more.
This unique type of coverage, which is geared towards those that live in natural disaster-prone areas, can make life during a tough time much easier. However, the rules on reimbursement qualification and included disasters can be easily misunderstood. With flooding in particular (something that those in Southern Florida are quite familiar with), standard home insurance doesn’t cover damage from these events and therefore does not provide additional living expense coverage. And, flood insurance policies that are available through the National Flood Insurance Program do not include additional living expenses either. FEMA is only able to help impacted homeowners and renters with alternative living expenses if the president of the United States issues a declaration due to natural disaster and homes are determined as uninhabitable.
How additional living expenses (ALE) coverage works
This type of coverage within your homeowner’s insurance policy can really come in handy, but it is important to understand how the coverage works so that you are not caught unaware. Suppose, for example, a hurricane leaves a policyholder’s home uninhabitable, and the homeowner is required to relocate for a few months while it is repaired. ALE coverage may help pay for costs that are more than typical living expenses, such as hotel bills, apartment rental, or restaurant meals, while the home cannot be lived in. Some of the other activities or items provided for under ALE coverage may include:
- If your laundry has to be sent out because you don’t have access to a washer and dryer at your rental home or hotel, then the costs at a laundromat may be covered
- Fee for credit checks charged by management of your temporary rental property
- Furniture (in the event you had to rent an apartment or condo that was unfurnished)
- Costs to rent special items you are usually used to having may be covered and considered
- If you have large items with you that would be otherwise subject to damage if left at home while the repairs are made, you may be able to get coverage for the cost of storage
- Meals eaten when driving back and forth for rebuild-related business, (visiting the construction site of your home, shopping for replacement personal property items, researching/purchasing rebuild items such as appliances, flooring, fixtures)
- Insurance policy taken out on contents in temporary rental house
- Moving or displacement costs
- Reconnection fees for setting up services (cable/telephone/utility) at the rebuilt home
- Pet boarding
- Sewer fee if you didn’t have one for your home
- Mailing expenses and photocopies related to your claim
- Internet/utility/cable connection setup fees
- Mileage to and from a rental home and to and from all locations visited for rebuild-related business, including furniture stores, financial institutions, flooring stores, granite and fixture showrooms, appliances stores, and anywhere else you may need to travel for construction materials you need to select
Although the costs listed above may be covered by ALE, it is normal to expect an assessment on how claimed costs compare to the normal costs of your lifestyle. Remember that additional living expense coverage is designed to pay the difference between your normal expenses and what you have to pay now that you cannot be in your home.
ALE does not cover, on the other hand, damage to your home or belongings. That said, those items should be covered by your homeowner’s insurance. The dwelling coverage in a homeowner’s insurance policy may help pay to repair physical damage to your home caused by a covered peril, like a hurricane. Personal property coverage, which is a common part of most homeowner’s or renter’s insurance policies, may help cover the cost to replace or repair belongings that were damaged by the natural disaster. However, this is why it is so important that you do a regular review of your homeowner’s policy to ensure that you have the right amount of coverage. Even basic home improvements can occasionally add value to your home which means you may want to raise the coverage too.
What makes your home uninhabitable?
It is important to understand how your insurance company may view the habitability of your home. While there really isn’t a solid definition for what makes an uninhabitable home, you should not try to use the storm to account for sections of your home that you didn’t like or needed to replace (like outdated wallpaper or worn carpeting). If, however, your home is destroyed or the bathrooms are completely damaged from the disaster, then it is far more obvious that your home will not be habitable for some time as you await repairs.
There are other situations that could also render your home uninhabitable for which you may not be covered. For example, if FEMA declares that you need to evacuate because of an incoming hurricane that is expected to make landfall in the near future, or the fire department orders you to evacuate because of a wildfire in the area that is working its way in your direction, your ALE coverage may not cover you staying in a hotel as you wait for the disaster to pass. However, if those incoming perils do end up destroying or creating significant damage to your home, then your temporary living expenses would likely be covered.
Ensuring maximum use of your applicable ALE benefits
The key to a seamless ALE claim is to establish your baselines, including identifying what you typically spend on groceries, going out to eat, mileage, utilities, etc., before the loss and what you anticipate you will need to spend to maintain your household’s standard of living in the temporary living situation.
Because of the differences between varying ALE policies, it’s vital that you understand the coverage you have is limited by time or a monetary amount. Make sure that you understand your ALE policy’s limits from the outset. If you determine that you need a long-term temporary housing solution, you may find that corporate apartments are suitable and convenient.
To ensure you maximize the ALE payment due to you, consider the following:
- Be ready to provide receipts for all your expenses.
- Document how the expenses are an increase from your normal expenses.
- Provide proof of your normal expenses to be used as a comparison point for the insurance company in case your receipts are questioned.
- Check with the insurance company and obtain written authorization for any special expenses to avoid misunderstandings.
As we sit at the peak of the Atlantic hurricane season, it’s important to stay on top of what you need to recover from a catastrophe. If you’ve got home damage as a result of a storm and you’re displaced because of it, reach out to Bulldog Adjusters to find out how we can help you handle the hassle of your home insurance company. Here at Bulldog Adjusters, we work our hardest to make sure that you get the largest possible settlement from your insurance company!