Coverage for additional living expenses (ALE) helps you to maintain your usual standard of living outside the home during home repairs. You shouldn't exceed the coverage limits if you want your insurance carrier to foot your entire bill for the duration you are outside the home. Here are a few tips to help you remain under the limit.
Understand ALE Coverage
The first precaution is to understand what ALE coverage means. ALE only applies to the additional expenses you will spend if your house is inhabitable. The coverage doesn't reimburse you for all the expenses you might incur during this time.
Consider the example of John, who normally spends $1,000 per week. If John spends $3,000 in two weeks living outside their home, John's ALE coverage will only compensate them with $1,000. The compensation makes sense because John's normal expenditure is $2,000 for two weeks, so the additional expenses are only $1,000.
Know Your Limits
Like other forms of insurance, ALE coverage also has its limits. Most insurance companies express ALE coverage as a percentage of the overall coverage limit. For example, your policy may express your ALE limit as 30% of the overall coverage limit. Keep this in mind while living outside your usual dwelling place so that you don't exceed the limit.
Track Your Expenses
All financial advisors will tell you that you can easily exceed your budget anytime you don't track your expenses. You can use the traditional notebook or download mobile applications, such as EveryDollar and Clarity Money, to track your expenses. Tracking expenses will help you modify your expenditures to remain within your ALE coverage limits.
Stick to Comparable Accommodation
A common mistake homeowners make is to live large while their home is under repair. For example, you might be tempted to choose a luxury home and fine dining establishments during this time. Only do that if the lifestyle is comparable to your typical lifestyle. Otherwise, you will soon exceed your ALE limits.
Prepare for the Long Haul
Lastly, you should not underestimate the time the contractors need to make your home habitable. A four-day repair job can easily transform into a week-long issue if the contractors unearth additional damages. Don't live large thinking that you will only be out of your home for a brief period. Include a few extra days to help keep your budget within the necessary limit.
You should know how much your ALE coverage is long before a disaster strikes and you have to vacate your home for repairs. Talk to an insurance agency, such as Oliveira Insurance Agency, for clarification on all the forms of coverage in your home insurance policy.Share