HOW housing coverage works

If your insurance includes Coverage D (sometimes called “Loss of Use” or “Additional Living Expenses” or “ALE”), that’s to cover the extra cost of living elsewhere while your home is rebuilt.

This amount is fixed according to your policy limits - it can’t be negotiated up.

Here’s what you need to know:

*This information has been checked for accuracy and non-bias
 by licensed professionals, experts and representatives from 
National 501c3’s. Consult with a licensed professional about your specific situation.

What ALE

covers:

What ALE covers:

  • Same standard of living: You’re entitled to housing comparable to what you lost (same size, quality, and location).

“You are entitled to “same standard of living”. That means that if you had a 3-bedroom, 2-bathroom house with a yard, that was 20 minutes from your job, you are entitled to the same. If that costs more than you used to pay, your insurance company is responsible for that, up to your policy limit.”

-Valerie Brown, California-based Disaster Recovery Expert

  • Furniture: You can typically use ALE to rent furniture if you’re not ready to buy things yet.

  • Hotel, Airbnb or other temporary accommodations

  • Meals while displaced (though this will stop once you have a rental with a kitchen)

  • Extra commuting costs

  • Extra utility expenses

  • Extra laundry or other miscellaneous costs

WHAT ALE DOES

NOT COVER:

Fire-safe doesn’t have to feel industrial.

  • ALE Does not cover: 

    • Luxury upgrades

    • Non-essential items

    • Pre-existing costs

    TIP: Be sure to save receipts for anything you hope to have reimbursed. 

It’s Only For

The Extra

Your ALE covers the added costs of temporary housing (ie, any costs you didn’t have before the fire). 

For example: 

If you used to pay $50 a month in electric bills, but your new bills are $100 a month, your ALE would cover the $50 delta.

You would still be responsible for the amount you spent before the fires. 

You Have

Three Years

Normally, ALE for a total loss in California is for up to 24 monthsup 24 months. Because the LA Fires were a Presidentially declared disaster, that was extended to 36 months. 

Something to know:

Your coverage does not grow if your rebuild timeline extends, so make plans with that in mind.

For example:

If you have $120k in ALE coverage, you could rent a comparable property that costs $10k a month, but that would only cover your rent for one year, with nothing left over for bills or any other additional expenses. After the year iswas up, you would be responsible for all your living costs until your home is rebuilt. Bear this in mind as you figure out your budget. 

IMPORTANT: Always get adjuster approval in writing before signing any lease or contract. They can deny costs they consider “unreasonable.”

You Have To

Be Rebuilding

You Have To Be Rebuilding, And Prove It

ALE only covers you during the rebuilding process. Your insurer will ask for documentation of your rebuilding efforts to prove that you are actually rebuilding. This can include proof of debris removal, soil testing, architectural plans, submission of permits, etc. They may ask to be put in touch with your architect or contractor as well. 

If you decide not to rebuild and permanently relocate, you may be able to use your ALE to purchase a new home, but a rental would not be covered. 

“What Will My

Budget Be?”

“What Will My Budget Be?”

Your insurer will estimate how much they consider a fair amount for your new rent based on your old home and your area. They’ll type the number of bedrooms and bathrooms into a search engine, which can be different than the reality of finding housing. (Many adjusters live in another State, so they often underestimate the cost of living in California.)

TIP:

If you find that what they offer you is lower than what it would cost for you to have the Same Standard of Living, look up some rentals that are the same square footage, quality, and have similar attributes/amenities to your old house, and send them to your adjuster. 

INCURRED COSTS

“Incurred costs”

This means you pay first, then get reimbursed. Always ask your adjuster (in writing) what documentation they’ll accept.