As the property manager, there’s a laundry list of items that you and your team take care of for your rental community, including policy paperwork, screening, maintenance, budgeting, communications, and marketing (and that’s just naming a few). While you can be proactive in various areas, one thing’s for certain: you can’t predict catastrophic events.
With that said, what happens when your property is hit by an unexpected weather event and your resident winds up having to move for a few months until renovations are completed?
This is where Additional Living Expenses come into play.
Assessing the Wounds
Additional Living Expenses (ALE), also known as Loss of Use coverage, is a component of renters (aka HO-4) insurance that helps cover the costs incurred when a resident cannot live in their rental property or unit due to a covered event, such as a fire, severe water damage, or a natural disaster. Climate.gov reports that the United States experienced 28 separate weather or climate disasters last year that each resulted in at least $1 billion in damages. With 2024’s weather stats looking to compete, it’s important to consider everything involved in an ALE claim. Common types of expenses covered under ALE include:
- Temporary Housing: Hotel or rental property costs for lodging during repairs
- Laundry Expenses: If the resident doesn’t have access to laundry facilities at their temporary lodging
- Storage Costs: For resident’s belongings while their home is being repaired
- Transportation Costs: Travel expenses if temporary housing is further from work or school
- Pet Boarding: In the case that the temporary residence does not allow pets
- Utility Expenses: Utility costs that incur while the resident is displaced
But as you read through these expenses, you might be wondering, “What is the normal standard of living?” To quote Nasdaq, “Don’t expect an unlimited stay at the Four Seasons.” The insurer covers additional costs incurred as a result of the displacement, meaning only what is over and above the resident’s normal spending on a weekly or monthly basis. The licensed insurer will determine this amount.
Caring from Start to Finish
Now that we’ve established the expenses that can be covered with an ALE claim, let’s dive into your roles and responsibilities as the property manager. ALE can significantly impact property managers in several ways:
- Financial Responsibility: from handling the logistics and communication related to the claim to coordinating with insurance companies and residents
- Resident Relations: crucial to managing the resident’s concerns and needs to nurture their loyalty
- Property Maintenance and Repairs: essential to minimize ALE costs
- Insurance Claims: prepare to assist residents in filing ALE claims (hence, the mentioned dollar-amount negotiations)
- Operational Disruption: ultimately impacting rental income which may require adjusting marketing strategies to fill vacancies
- Legal Considerations: related to tenant rights and responsibilities during a displacement
- Budgeting and Forecasting: important to understand potential ALE scenarios to set aside contingency funds
While logic tells us that you need to proactively manage these aspects, it is important to note that ALE coverage is not typically available with most Renters Liability policies. This is where you as the property manager need to do your homework in finding an option that covers these needs.
Finding a Remedy
The good news is that ePremium® Insurance Agency doesn’t offer the typical Renters Liability policy. ALE coverage is available on our enhanced Renters Liability policy, helping with any necessary increase in living expenses incurred by the resident to maintain their normal standard of living.
Other losses that we can help cover include:
- Loss of Rental Income
- Pet Damage
- Bed Bugs
- Fungi/Bacteria
- Bodily Injury
- Dog Bite
- Exhaustion of Limit
While you can’t predict when an emergency situation will arise, you can be prepared to better support your rental community. Schedule a call with our team so that you can be ready with an extra layer of care on your renters liability policy.
ePremium Insurance Agency, LLC, a limited liability company organized under the laws of Ohio, is a licensed insurance producer in all states, except Alaska with its principal place of operation at 4770 Duke Drive, Suite 200, Mason, OH 45040 (NPN 9925625, California License No.: 0G66570, Texas License No.: 1549460). ePremium Insurance Agency, LLC does business under the following names: in NY dba – ePremium Insurance Agency LLC; in FL dba – ePremium Insurance Agency, LLC; in CA dba – ePremium IRIS Insurance Solutions, LLC.