Additional Living Expense (ALE) Claims
HERE IS A SUPER IMPORTANT ALE TIP!
In recent years, wildfires in the western United States have been horrendous, displacing tens of thousands of people from their homes and businesses and causing billions of dollars in fire damage. But what happens when local authorities force you to assess when the fire is getting too close?
There is coverage in the ALE part of the policy! I promise insurance companies are not running TV and radio ads alerting their policyholders to THIS coverage!
Here is an exact quote from the ISO homeowners policy:
“If a civil authority prohibits you from using the “residence facilities” as a result of direct damage to neighboring facilities by a Peril Insured Against in this policy, We Cover Additional Living Expense and loss of Fair Rental Value. .for no more than two weeks”. (1)
On a homeowners insurance policy, you’ll usually see ALE coverage listed as Coverage D. It’s sometimes called Loss of Use.
Additional Living Expenses (ALE) coverage is just what you might think it is. When you have a covered loss that makes the place where you live unfit to live and forces you to spend more on normal operating costs than you normally do, ALE coverage pays.
Your policy probably says the following: “Additional living expenses, which means any necessary increase in living expenses incurred by you in order for your household to maintain your normal standard of living.”
ALE covers things like:
A. Temporary housing, such as a hotel, apartment, or rental house. If you live in a modest home, don’t expect the insurance company to pay for the best hotel room in town. But on the other hand, if you lived in an expensive house, you should WAIT AND DEMAND that the insurance company pay for temporary housing of the same kind and quality. Remember, if you had a mortgage on your home, you still have to pay the mortgage payment while the home is being repaired. Many times the loss is severe and the adjuster knows you will be away from home for weeks or months. The insurance company will save money if you place your family in an extended-stay hotel, or in a short-term rental apartment or house. In addition to saving money on rent, the insurance company can pay Contents Down Payments, and if you’re in an apartment or house, you’ll have a place to store your new contents, such as furniture, clothing, and kitchen utensils.
b. Laundry and dry cleaner. If you had laundry facilities at your residence, it would cost more to clean your clothes. The additional cost you incur is covered.
against Meals. This is where many people misinterpret his claim. Certainly, if you cannot buy and prepare your own meals, you will incur higher food prices. But insurance companies generally won’t pay for expensive steak dinners or expensive bar bills. You’ll need to be able to explain your food purchases, so don’t overdo it. You will have to make an accurate estimate of what your family normally spends per month on food. That can certainly include restaurant meals you normally buy. Just remember that ALE is paying for items ABOVE your normal standard of living. Keep THOROUGH RECORDS of your food purchases. If the insurance company puts you in a temporary apartment or efficient hotel that has a kitchen, they will stop paying for most extra meals.
d. Accommodation expenses for pets. Someone has to take care of your pets while you can’t live at home. This is covered.
my. Increased transportation costs for all your vehicles. Do you have to take your children to school, since your temporary accommodation is not in the old school district? That’s covered. Do you have to drive more to and from work? Covered. Do you have more to drive to doctors, dentists, ballet classes, soccer games, etc.? The increased cost is covered. Did I say KEEP THOROUGH RECORDS? Most office supply stores have car expense log books for sale for a dollar or two. Stop by and pick one up for every car you drive, and write down EVERY TRIP. Save all receipts for every penny you spend on transportation.
F. Rental of furniture for temporary residence. You have to have chairs and beds and other things… even pots and pans, dishes and temporary electronics. However, don’t try to get them to rent a 60″ flat screen plasma TV if you have a 27″ color TV at home.
gram. Transportation and storage expenses. Perhaps some of his personal property was not damaged. Maybe something was damaged, but the restoration contractor is cleaning it up and fixing it. Once it is cleaned and repaired, it needs to be stored somewhere until you can return home. Covered.
H. Expenses for telephone installation or public services at your temporary residence. This would include deposits that utility companies might require. Don’t forget garbage collection at your temporary location. It’s all covered. Even cable TV connections would be covered if you had cable at home before the loss.
What if you stayed with relatives and did not incur a rent increase and many of the other expenses shown above? Another scenario is that you simply don’t want to go through the process of documenting all of your extra expenses. The policy gives you the option of being paid the “Fair Rental Value” which is: “the fair rental value of that part of the ‘residential premises’ where you reside less any expenses that do not continue while the premises are unfit to live in.”
How much would you rent your house for? That is the question.
You will need to make a comparison between your residence, as it was before the loss, and properties in the neighborhood that are comparable to yours. A good real estate broker can be very helpful in checking these comparable properties and their monthly costs. Once you determine the fair rental value of your home, you must subtract expenses that do not continue through the restoration period, such as some utilities, trash removal, gardening services, or cleaning services.
Some insurance companies will continue to pay for additional transportation costs, relocation expenses, contents storage, and utilities in addition to the fair rental value. Some will make you choose ALE or fair rental value. Find out from your insurance company what they are going to do and make your decision.
Go to the website listed in the Resource Box below and find the Resources tab. Download the ALE worksheet and make as many copies as you need. Use it as your guide to register and submit your ALE claim.
If your records and receipts were damaged in your loss, contact your utility companies, credit card companies, and other creditors and obtain copies of the last two months’ bills. You will need these records to confirm your normal operating expenses.
Finally: Don’t be surprised if your claims adjuster or examiner tries to disqualify some of your legitimate expenses. Don’t just accept what the adjuster says. If it’s a truly legitimate expense, FIGHT FOR IT! Go over the adjuster’s head to his supervisor. Keep fighting. Send them a letter insisting that they give you a written denial of any legitimate expenses. Once you have that in your possession, call your state Department of Insurance (DOI) and file a written complaint. You never know what impact a DOI complaint will have on your claim.
(1) Bureau of Insurance Services, Inc., “CPCU Insurance Policy Manual,” 2005.
Copyright 2008 by Russell D. Longcore