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Home Insurance Coverage D: Additional Living Expenses

Additional Living Expenses – What’s Covered?

Additional Living Expenses coverage covers your expenses if you have to leave your home due to an insured loss.

Also known as ALE, Additional Living Expenses coverage will protect you against out-of-pocket costs that you may incur if your home is uninhabitable as a result of damages that are covered under your existing home insurance policy.

Most Ontario home insurance policies provide three categories of ALE coverage, including:

Additional Living Expenses: This helps to reduce the financial burden related to living away from your home while repairs are being made by covering extraordinary costs such as:
- Hotel bills
- Restaurant meals
- Laundry
- Rent
- Mileage
- Pet boarding
- Storage
Remember to keep all your receipts, and speak with your broker for more details on coverage.
Fair Rental Value: If you rent out a portion of your home (such as a room, apartment, or suite) and your rental unit is rendered unlivable by an insured event, your home insurance policy may provide reimbursement for any lost rental income.
Prohibited Access: If you are temporarily prohibited from living in your home as a result of an emergency in your neighbourhood such as a natural disaster, you may be able to claim ALE – even if there’s no damage to your home.

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Coverage Limits

Additional Living Expenses coverage pays for the costs to maintain your normal standard of living while you are temporarily relocated. Your ALE coverage will cover the expenses of a comparable lifestyle; limits vary with each policy and insurance provider, as do time limits on coverage.

In most cases, the combined total ALE limit for all of the above three categories is 20% to 30% of the replacement cost coverage on your home insurance policy. So for example, if the replacement value of your home is listed on your policy as $500,000, the maximum Additional Living Expenses coverage would be $100,000 to $150,000.

When Does Additional Living Expense Coverage Apply?

Generally speaking, eligibility for ALE is activated under most home insurance policies when an insured peril renders your home uninhabitable.

For example, if your home has been damaged by fire or fire-related damage such as flooding, you would be covered under ALE from the time the fire occurred right up until you were able to move back in.

Additional Living Expense coverage may also be activated in special circumstances that prevent you and your family from residing in your home, such as an emergency evacuation order issued by a municipal, provincial, or federal authority. You could be ordered to evacuate your home due to widespread flooding, forest fires, or a catastrophic event such as a chemical spill in your neighbourhood.

For details on the specific situations and perils that trigger Additional Living Expense coverage on your homeowner insurance policy, contact one of our brokers here at Mitchell & Whale. We’ll help you understand your existing coverage, review quotes, and find the right protection for you and your family.

How is additional living expense calculated?

Additional Living Expense coverage will cover any additional costs that you incur if you and your family are forced to leave your home temporarily due to an insured loss, or if you are unable to access your home due to a government evacuation order or sometimes due to damage to a neighbouring property.

This coverage is usually limited to a maximum of 20 or 30% of the replacement value of the home, as listed in the policy, or 12 months. The coverage is meant to pay for comparable accommodations to what you are used to, so it likely won’t pay for a five-star hotel or meals at a five-star restaurant.

If you need to leave your home due to an insured loss or evacuation order, your Additional Living Expense coverage will typically reimburse you the cost of a short-term rental or hotel accommodations, plus the cost of meals, laundry, and possibly even pet boarding, storage and mileage put on your vehicle.

It’s very important to note that the coverage is for “additional” expenses, so if you spend $1,500 a month for family meals while you are on a family meal in a restaurant, you will be reimbursed $150 minus whatever you would have paid for that meal if you made it at home. The same applies to mileage. You will only be reimbursed for mileage if your relocation requires you to drive more than you typically would.

Is additional living expenses the same as loss of use?

Yes. They are two names for the same thing. Typically called Additional Living Expenses coverage in Canada, this coverage helps homeowners cover additional expenses they may incur if they are forced to live away from their home while repairs are underway after an insured loss.

What is the difference between fair rental value and additional living expense?

Fair rental value is a coverage that may be included in your home insurance policy under the same section as additional living expenses. Fair rental value coverage is there to reimburse you for lost rental income if your home suffers an insured loss that forces your tenants out.

Note that you can only claim fair rental value if you were renting out all or part of the property at the time of the loss.