Is Your Insurance Company Withholding Your Additional Living Expense (ALE) Benefits Until You Begin Construction?

Because of the number of fires in California over the past several years, there are huge shortages of labor and materials for building homes. It can take well over a year for someone who lost their home in a wildfire to secure a contractor and get permits to be able to build.

The California Department of Insurance knows this. On May 18, 2019, the Insurance Commissioner issued a Notice requiring insurers to extend additional living expense (“ALE”) benefits to as long as 36 months if needed for claims made due to a state emergency such as a wildfire, regardless of any time limit in the policy. “Good cause” is specifically noted to be unavoidable delays in the construction process. This can be delays with obtaining permits, or finding a contractor, or getting materials. It can also be delays due to the pandemic.

Note that this extension does not increase the dollar limit of ALE, if any, in the policy, so if your rebuild is delayed, you want to minimize the monthly cost of your lodging and related expenses to stretch it out as long as possible. This extension only applies to fires that occurred on or after September 21, 2018. However, 29 insurance companies agreed to voluntarily provide this extension to victims of the 2017 wildfires as well.

Some of the large, national insurers that agreed to voluntarily offer extensions of ALE to the 2017 wildfire victims are Farmers, CSAA, Liberty Mutual, Safeco, Travelers, USAA, Hartford, CHUBB, Capital, FAIR Plan, Ameriprise, and more.

Some of the insurers who declined to extend ALE coverage for the 2017 wildfires are State Farm, Nationwide, Grange Insurance, Allstate, Assurant, First American Title, Western Mutual, Global Indemnity Group, and AEGIS Security Insurance.

Despite this requirement, insurance companies are still cutting off insureds, refusing to pay ALE until they can show “proof” that they have begun construction. For many of these policyholders, they have not even been able to find a contractor with availability yet.

What can you do in this situation? Let your insurance company know that you are aware of your rights. Explain to them that Cal. Ins. Code Section 2051.5(b)(2) extended coverage from 12 months to 36 months during a state of emergency. An additional extension of 6 months can be obtained for “good cause” if the insured encounters unavoidable delays in the rebuild process. Ask them to show you the policy provision that allows them to require that you must have begun a specific step in the rebuild process to continue receiving ALE payments (Spoiler alert, there isn’t one). If your claims adjuster continues to refuse to reinstate payments, you have a few choices. You can ask to escalate to his supervisor.  You can file a complaint with the Department of Insurance.  You can retain a public insurance adjustor to represent you.

If the delays continue despite all this, you can reach out to an attorney to discuss litigation. If this situation sounds at all familiar to you and you have had trouble dealing with your insurance company regarding your homeowner policy, please call Kantor & Kantor for a free consultation at 800-446-7529 or use our online contact form.

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