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Insurance Article

Does Your home Insurance Cover "Additional Living Expenses" (ALE)?

October 28 2016
Home Insurance Cover

ALE assists in rebuilding home after insured perils

Imagine your house destroyed by fire and all your possessions burnt down. For those who have a home insurance, some of your worries are put to rest. But when you are displaced from your very home, will your insurance help?

The constant inflation in of real estate and rents rates are found unaffordable by most in India. If your dwelling is unfit for occupancy, these are your alternate residence options. Can you manage to bear the accommodation and food expenses of your family under such a dire circumstances? This is where Additional Living Expenses (ALE) in a home insurance coverage comes into the picture.

An ideal home insurance plan will include ALE in their structural home insurance policy. It covers the additional cost of living incurred by the policyholder in case of temporary displacement of residence. It is the amount of reimbursement that you can claim if you incur additional expenses due to displacement.

For instance, you cannot claim your home loan premium as ALE. However, you can claim ALE when you have to rent a home for your family since your permanent home is being rebuilt or repaired due to an insured peril. Let's take a look at the extent of coverage offered by ALE in your policy:

What does ALE cover?

ALE covers additional expenses for the same kind of lifestyle that you enjoyed before the peril. If you lived in an apartment flat you won't be paid living expenses for residing in a bungalow.

The policy wordings are a better guide for the amount of coverage and it varies across insurers. This coverage pays for hotel bills, restaurants, rents and other necessary expenses. The coverage is however limited to a specific period only, usually to a maximum of 3 years.

  • Hotel Accommodation
  • Hotel accommodation in the same city is eligible for the coverage. However, again it has to match your lifestyle before you were displaced. Most insurers, however, insist on rented stays than hotel accommodation, some assist the insured in finding a temporary place of residence.

  • Rent
  • Rental expenses are covered provided the rental area is equivalent to your home and is in the same city. Insurers prefer to pay for alternative accommodations in the same neighbourhood.

    If your home was a 2BHK you will be eligible for renting a 2BHK housing only. The coverage excludes ‘Kutcha’ construction.

  • Food Expenses
  • You will be eligible to claim restaurant bills provided the choice of restaurant is as per your normal lifestyle. Such expenses are usually paid in case you don't have an access to kitchen or home cooked meals; as per your regular routine. This amount does not include grocery bills.

In addition to these basic coverages, some insurers also offer coverage for utilities and mileage, in case the rental home is in a different neighbourhood and you have to travel longer distances. If you have to drive further to the office or drop your kids to school, such conveyance expenses are covered too.

Please note, all of these coverages are limited to the amount specified in the policy wordings. Usually 20% of the overall insured limit. Repairs and rebuilding of your home could take a long-time, such a coverage reduces the stress of living situation for your family, and hence ALE is an efficient way to rehabilitate post displacement.

ICICI Lombard offers Additional expenses of rent for alternative accommodation under home insurance plan. Click here to know more.

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