Loss of Use, Additional Living Expenses, ALE or coverage D; they all mean the same thing, but what is it?  If a loss makes your residence uninhabitable, then there may be additional money you will collect from your insurance claim.  The increased payout will be for your additional living expenses during the time required to repair or replace the damage to your dwelling. If you permanently relocate after a loss, it might also pay for your increased expenses during the time require to move your household to the new location.

Imagine your house burns down, you will undoubtedly need someplace to live.  Many people don’t realize it, but just because your house burns down, doesn’t mean you don’t have to pay your mortgage.  Your mortgage payment will still be due, month after month!  Insurance can help you to find a comparable house to live in while your house is rebuilt.

Loss of use is a coverage that can rack up expenses quickly to an insurance carrier.  Because of this, insurance companies have put in place tighter limits and time restrictions.  Especially for homeowners in Colorado, I recommend carrying at least 24 months of Additional Living Expenses coverage.  I’m seeing many insurance companies limit loss of use to 12 months.  Talk to any contractor (or homeowner who has experienced a house fire), and they will tell you there is almost no way you will be back in your house within 12 months after a fire.  Between the debris removal, the permitting, the inspections and weather, it’s next to impossible.  The other thing to look at is your monetary limits on loss of use.  You probably want to be in the same neighborhood while your house is being rebuilt.  What does a similar house in your neighborhood (furnished) rent for on a month to month basis?  Make sure at a minimum you multiply that number by 24.

On most home policies, loss of use will also apply if a civil authority prohibits you from the use of your residence as a result of direct damage to neighboring premises by a cause of loss covered.  I’ve seen loss of use paid out when evacuation notices are in place for neighborhoods due to a wildfire.

Mike Schmisek