When disaster strikes and you’re forced out of your home, Additional Living Expenses (ALE) coverage can be the financial bridge that keeps you afloat. It helps cover the cost of living somewhere else while your home is being repaired due to a covered loss—like a fire, storm, or burst pipe.
But how much ALE coverage do you really have? More importantly, how much is actually enough to get through a crisis without going into debt or draining your savings?
In this guide, we’ll break down how ALE coverage limits work, what they typically cover, what factors can drive up your temporary costs, and how to determine the right limit for your situation.
What Is ALE Coverage, and Why Does the Limit Matter?
ALE coverage—sometimes called Loss of Use coverage—reimburses you for extra living expenses if your home becomes uninhabitable due to a covered peril. This doesn’t just include rent or hotel stays. It also includes increased costs for food, utilities, transportation, pet boarding, and more.
But this coverage isn’t unlimited. Once you hit your ALE limit, the support stops—even if your home still isn’t ready.
This is why understanding your ALE limit is just as important as understanding what ALE covers.
What Are ALE Limits Based On?
ALE limits are determined by the type of insurance policy you have:
For Homeowners
ALE coverage is usually set at 20% to 30% of your dwelling coverage (Coverage A).
Example:
- If your home is insured for $300,000
- Your ALE coverage may range from $60,000 to $90,000
That sounds like a lot—but depending on where you live and how long you’re displaced, it can go faster than you’d expect.
For Renters
ALE limits are usually a fixed dollar amount, often between $10,000 and $30,000, depending on the insurer and plan.
Renters generally don’t need as much coverage as homeowners because they don’t face rebuild timelines. But in high-cost cities or situations where a total loss occurs, the cap can still fall short.
What Does ALE Actually Cover?
ALE coverage reimburses you for the difference between your normal monthly expenses and your new, higher costs due to temporary displacement.
Here’s what’s typically included:
| Category | Covered Examples |
|---|---|
| 🏨 Housing | Hotel stays, short-term rentals, rental deposits |
| 🍽️ Food | Takeout, delivery, dining out, meal services |
| 🚗 Transportation | Longer commutes, rideshare costs, public transit |
| 🧺 Utilities & Services | Double utility bills, laundry, internet setup |
| 🐾 Pet Care | Boarding, pet sitting, deposits for pet-friendly rentals |
| 📦 Miscellaneous | Storage units, moving expenses, furniture rentals |
🔎 Reminder: ALE only covers costs that exceed your usual monthly expenses—so you’ll need documentation showing your pre-loss baseline spending.
Real-World Costs Add Up Fast
Let’s walk through a realistic scenario.
Imagine you and your family of four are displaced for 3 months due to a house fire. You live in a mid-sized city with average rent and food costs. Here’s how the numbers could break down:
| Category | Estimated Cost |
|---|---|
| Temporary rental (3 months) | $4,000/month → $12,000 |
| Food & dining out | $500/month extra → $1,500 |
| Gas & transportation | $300/month → $900 |
| Laundry services & supplies | $300 |
| Storage unit & moving fees | $700 |
Total: $15,400
And this doesn’t include potential deposits, pet boarding, or lost wages. If you’re out of your home for 6–12 months, you could easily exceed $30,000–$50,000, especially in high-cost regions like California, New York, or coastal Florida.
6 Factors That Influence How Much ALE Coverage You Need
- Cost of Housing in Your Area
- A small rental in a rural town may cost $1,200/month, while a city hotel suite can run $4,500/month.
- If your area has limited rentals, prices surge after disasters.
- Family Size and Pets
- Larger households need more space and amenities.
- Boarding pets or finding pet-friendly rentals adds to costs.
- Duration of Displacement
- Minor water damage might require only 2 weeks of ALE.
- A full rebuild after a fire could take 9–18 months.
- Your Normal Lifestyle
- ALE covers the difference between your usual living costs and current ones. If you already spend modestly, the gap will be larger.
- Policy Time Limits
- Some ALE policies cap reimbursement by time (e.g., 12 months), even if you haven’t hit the dollar limit.
- Local Disaster Risk
- Wildfires, hurricanes, and tornadoes can displace entire communities—which spikes rental prices and lengthens repair delays.
What Happens If You Hit Your ALE Limit?
If you reach your ALE coverage cap:
- Your insurer stops reimbursing expenses, even if your home isn’t ready
- You are responsible for 100% of additional costs
- You may need to borrow, use savings, or negotiate with landlords and creditors
Worse, you may still owe mortgage or rent payments on your damaged home plus the temporary housing expenses out of pocket.
How to Avoid Running Out of ALE Coverage
1. Recalculate Your Needs Annually
Review:
- Local rent averages
- Current rebuild costs per square foot
- Food and transportation inflation
Adjust your coverage if the numbers no longer reflect reality.
2. Keep Detailed Records
Track:
- Normal vs. displaced monthly costs
- All receipts
- Communications with your insurer
This helps ensure you get reimbursed correctly and quickly.
3. Budget Conservatively During Displacement
Avoid:
- Unnecessary luxury rentals or high-end food delivery
- Extended stays if your home is nearly ready
- Costs that aren’t pre-approved by your insurer
Staying within reason helps preserve your ALE limit for essentials.
Can You Increase Your ALE Limit?
Yes—and in many cases, you should.
Options:
- Ask for a higher ALE percentage (e.g., increase from 20% to 30% of dwelling coverage)
- Add endorsements for extended loss of use
- Bundle with umbrella coverage or specialized disaster endorsements
- Switch insurers for better overall protection
📞 Tip: Talk to your agent or broker during renewal season. It’s often cheaper to raise your ALE coverage ahead of time than to pay out of pocket after a disaster.
What If You’re Already Displaced and Running Low?
If you’re actively using ALE benefits and nearing your limit:
- Request an extension or appeal based on extenuating circumstances
- Negotiate with your landlord or hotel for lower rates or payment plans
- Talk to FEMA or local disaster agencies for temporary housing assistance
Final Thoughts
ALE coverage can be the financial lifeline that keeps you stable after a crisis—but only if you have enough of it.
Don’t assume your current limit is sufficient. Rising housing costs, longer repair timelines, and regional disasters can push expenses beyond expectations—quickly.
Take a moment to review your current homeowners or renters insurance policy. Compare your ALE coverage against realistic temporary living costs in your area. If there’s a gap, make the adjustment now—before you’re forced to find out the hard way.
