Allocated Loss Adjustment Expenses (ALAE)

If you have insurance and something goes wrong, you file a claim and (hopefully) the company pays to fix your problem. (Assuming, of course, that the company's lawyers can't find a convenient out in the fine print.)

Allocated loss adjustment expenses represent those expenses that are directly related to your particular claim. This includes the cost of an adjuster to investigate your claim or any legal resources that go into processing your claim, especially if outside contractors are used for those services. The concept stands in contrast to unallocated loss adjustment expenses, which are expenses of a more general nature and not related directly to your specific issue.

So from the insurance company's point of view, the cost of that lawyer combing through the fine print to find every possible way to deny your claim would fall under allocated loss adjustment expenses. The office he works in and the company coffee he drinks and his boss's salary would all fall under unallocated loss adjustment expenses.