Texas Additional Living Expenses

What the coverage is for

The Insurance Information Institute describes additional living expenses, often shortened to ALE, as the extra cost of living away from home when you cannot live there because of an insured disaster. It covers hotel bills, restaurant meals, and other costs above your usual living expenses while the home is being rebuilt. It is not a second salary and it is not a blank check for any hotel you like. Insurers talk about a reasonable amount. Keep the receipts.

The National Association of Insurance Commissioners lists this on the declarations page as loss of use: living expenses if you cannot live in the home. Same idea, different heading. When you read a policy, look for both phrases. A quote that never mentions either one is a quote to question.

Renters policies include the same kind of help. The Institute’s renters guide says additional living expenses pay hotel bills, temporary rentals, and restaurant meals, generally the difference between those extra costs and your normal living expenses, while the rental is being repaired after a covered disaster. A condo policy often has a loss-of-use piece as well. The building you do not own is still not your problem to rebuild. The place you sleep is.

How much, and for how long

The Institute’s homeowners handbook says many policies provide additional living expenses equal to about 20 percent of the insurance on the dwelling. Limits vary by company. Some policies also use a time limit. State consumer guidance puts the common range at 10 to 20 percent of what the house is insured for, and gives the arithmetic: 10 percent of a house insured for $200,000 is $20,000. It also says policies often pay until you have used that percentage or for up to 12 months, whichever comes first. Those are descriptions of most policies, not your declarations page. Read the dollar figure and the number of months printed there.

The limit is separate from the dwelling limit. The Institute is explicit: even if you use up the additional living expenses, the company still pays to rebuild the home up to the policy limit. Running out of hotel money does not cancel the repair. It means the hotel becomes your bill. Watch the spending so the limit lasts as long as the repairs. If you hit the cap early, you pay the rest.

Ask whether the percentage is of the dwelling amount, a flat dollar limit, or a time period such as 12 months. Ask whether a higher limit is available before hurricane season, not the week you are in a hotel. A house insured too low for rebuild cost produces an additional-living-expense limit that is too low as well, when the limit is a percentage of the dwelling.

The loss has to be covered

Policies pay when you cannot stay because the home was damaged by something the policy covers. A tornado that the home policy covers is the example state guidance uses. A fire is the same logic. If the cause is excluded, the hotel is not this coverage.

A power outage or a water shutoff, with no covered damage to the home, is not enough. Leaving because the neighborhood is dark does not start the coverage. Covered damage that makes the home unlivable does. Photograph the damage that forced you out. The adjuster will ask why you could not stay.

Flood is the exclusion that surprises people. Ready.gov says a homeowners policy does not cover flooding, and that a National Flood Insurance Program policy typically takes up to 30 days to take effect. State guidance adds a second disappointment: most flood policies bought through that program do not pay additional living expenses. A few home policies include some flood coverage and might pay loss of use. Assume yours does not until you read it. If you need a hotel after rising water, price that cost yourself or ask whether a private flood policy, not the standard federal form, includes loss of use. Our flood guide is the separate comparison.

Wind, the coast, and a house you rent out

If you do not live on the coast, the home policy probably includes wind and, with it, additional living expenses when wind damage makes the house unlivable. On the coast, wind may sit on a separate policy. State guidance says to ask, if you have a Texas Windstorm Insurance Association policy, whether you bought the extra coverage for additional living expenses. That option is described for a primary residence, not a second home. A beach house you visit is a different ask from the house you sleep in. Our windstorm guide covers the wind policy. This page is the hotel-and-meals piece.

If you rent part of your house to a tenant, the Institute says additional living expenses can include the rent you would have collected if a covered loss had not destroyed that use. That is lost rent, not the tenant’s hotel. The tenant looks to a renters policy for their own extra living costs. Do not promise them your loss-of-use limit. If the whole property is a rental you do not live in, ask whether the form pays fair rental value instead of additional living expenses. A landlord who does not need a hotel still needs the rent.

How the money is paid

The Institute’s claim-payment guide says that if the home is uninhabitable you should also receive payment for the additional living expenses you incur. It is often a separate check from the repair check. Save every receipt: lodging, the extra cost of meals, laundry, pet boarding if the form allows it, and the extra miles if the only open hotel is far away. The company pays the reasonable extra amount, up to the limit. A meal you would have eaten at home is not an extra cost. The difference between eating out and your normal grocery bill is the kind of gap the coverage is built for.

If a lender is on the policy, repair checks are often sent to the mortgage company. Ask whether the additional-living-expense check is treated the same way. You need that money while you are out of the house, not after a loan office releases it. Call the claim number on the policy, not a general office line, and ask how to submit receipts as you go so you are not financing two months of hotel on a credit card with no plan.

Temporary repairs that keep rain out of the house are part of protecting the loss. They are not the same as additional living expenses. Keep those invoices in a different stack. Do not start a full remodel before the company has seen the damage, unless the form allows emergency work. The Institute’s disaster guidance says to make reasonable temporary repairs and to record names and numbers of everyone you speak with.

Renters, roommates, and the people the limit does not follow

The landlord’s building policy repairs the building. It does not put you in a hotel. That is what a renters policy’s additional living expenses are for, and the Institute lists them beside personal property and liability as one of the three basic parts. If two roommates share a unit and only one bought the policy, ask whether the other person is a named insured. A limit that covers one household’s extra meals does not automatically cover a roommate who is not on the contract. Each of you may need your own policy, or one policy that names both.

Children away at school and relatives staying for a month are the same kind of question. Ask who counts as part of the household for loss of use. Do not guess from the declarations heading. The dollar limit is one number. The people it feeds is a definition in the form.

How to shop it

Texas Insurance Resources can compare loss-of-use limits with licensed agents. We do not book the hotel and we do not pay the claim. The homeowners guide is the wider picture if you are still setting the dwelling limit that this percentage often hangs on.

Sources

The description of extra living costs, the separate limit, and the roughly 20 percent handbook note come from the Insurance Information Institute. The 10 to 20 percent range, the 12-month note, the power-outage exclusion, and the flood-program gap come from state consumer guidance. Flood buying timing comes from Ready.gov.

• Insurance Information Institute, what standard homeowners insurance covers
• Insurance Information Institute, homeowners insurance handbook (2023)
• Insurance Information Institute, renters insurance
• Insurance Information Institute, the claims payment process
• Insurance Information Institute, settling claims after a disaster
• NAIC, understanding your homeowners or renter’s policy
• Ready.gov, Floods
• Texas Department of Insurance, when policies pay additional living expenses
• Texas Windstorm Insurance Association, coverage and eligibility