Have you ever had a property damage insurance claim where your home, or the property you rent to others, was unlivable as a result of the damage or the repairs needed? There is coverage in your insurance policy which is listed as Additional Living Expenses (ALE) or Loss of Use.
ALE is an important coverage that comes into play when you cannot reside at your property during the repairs that have to be made and temporary living accommodations are needed. Most insurance companies state that your property has to be uninhabitable for this coverage to apply.
So, what deems your property uninhabitable? There are many reasons you may lose use of part of your property during repairs, including the amount of rooms affected by the damage, the type of repairs being done and your health or other factors.
Depending on the insurance company, they will either set up temporary housing and pay the housing expenses directly, or they will require that you first incur (pay) the expenses, then submit your invoices. They will then reimburse you for the extra expenses that are over and above your normal and customary living expenses.
For example, if you pay a monthly mortgage or you are mortgage free and incur hotel expenses, the hotel expenses are considered over and above and are reimbursable by the insurance company. If you incur additional gas because your commute to work increases, the increased cost of gas/mileage is reimbursable. If your food expense increases, the amount incurred over and above what you would normally pay for food is reimbursable. With our knowledge and expertise, we prepare and submit a detailed report of your expenses so there is never any question what you are owed by your insurance company.
If you own a rental property and your tenant is unable to reside at the property, the insurance company will pay the Fair Rental Value. If you were to lose your tenant as a result of the damage due to the length of time needed for repairs, the insurance may reimburse you for the portion of the lease that was lost and for the amount of time you will be unable to rent the property to others during repairs.
Lastly, we often times see that there is limited coverage for this expense. In the event of a large or catastrophic loss, depending on the type of accommodations and length of time needed, you can exhaust your coverage limit quickly. It is always important to review your policy to make sure you are properly covered.