A disaster has struck, a hurricane just blasted through your home and left your home uninhabitable. Now, you are forced to evacuate because living in that home could be hazardous for your health. What do you do? Having to leave your home will cost money, especially paying for somewhere to stay. Well, don’t resort to a shelter. Typically, insurance policies have what is known as additional living expenses (ALE), in the event that a policyholder must leave their homes for issues out of their control.
It is crucial to determine whether additional living expenses coverage is present during the time that a home may need to be repaired and they will incur losses and expenses as a result. This coverage is available in some homeowner’s insurance policies to pay for the living expenses that are obtained until the homes are completed and safe to move back into. Because a lot of time and money can be spent on additional living expenses, ensuring that fair compensation is provided by these insurance companies can be achieved with the assistance of a public adjuster. Repairing a home is expensive, and dealing with insurance companies is an even bigger headache.
Common Issues that May Arise with ALE claims
Homeowners who have ALE coverage on their homeowner’s insurance policies may run into some common issues that may arise when they make these types of claims. Some insurance companies use preferred contractors to inspect the homes and estimate the amount of time that it will take to repair them. These contractors have the interests of the insurance companies in mind when they complete their inspections. Since insurance companies are motivated to protect their bottom lines by paying out less in claims, the preferred contractors may try to help them to meet that goal by estimating the projects will take less time than they actually will, leaving the gap of time to be paid for by the claimant.
Based on what a preferred contractor determines, the insurance company will set out an additional living expense offer to the policyholder for any expenses they will acquire as a result. Identifying the exact time a project will take should be considered by multiple contractors in the area, a piece of advice a public adjuster will undoubtedly give. Based off of all those estimates, the public adjuster will negotiate what they seem to see as a fair settlement to provide while the home gets repaired versus what the preferred contractor is stating it should be. People should avoid accepting lump-sum offers that are based on the estimates given by preferred contractors, or they might find that they do not have sufficient additional living expense funds to pay for the costs that they incur while they are unable to use their homes.
The fact that every insurance policyholder should know is that the company just sees numbers, they do not see the loss of their customers, or the emotional strain that it may be causing them. They want to look at a profit, and having contractors work by their side is one way they will profit because they will reduce the actual time needed to repair the home. So, what happens to those additional living expenses that you must pay out of your pocket? For that reason, a wise public adjuster could be of assistance.
How Does ALE Coverage Really Work?
This coverage is quite complex because it involves many details and mathematics. Fully understanding how it really works could seem difficult for many policyholders. But, something that is understood is that this coverage will work to cover any expenses that the claimant has for an additional living cost that exceeds that of their normal costs for an insurance claim. In other words, the focus is on the additional costs. Here are a couple of examples that may clarify any confusion:
Due to a fire that consumed a home, a landlord told their tenant that they do not have to pay the monthly rent of $600 until it is fixed. That makes their normal expenses of $600 remain in their pockets. As a result, let’s say that the tenant finds a place that will temporarily house them that is near their original home and about the same quality as it until their home is fixed for $1000 because it contains furniture. In this case, their additional living expenses would be $400, not $1000 because their original rent was $600. 1000-600= 400. This means that the ALE would pay for $400, not the full $1000. The difference must be paid by the policyholder because that is what they paid before.
Similarly, instead of the $1000 rental, they find a location that has a better view for $1,500. Their insurance company can determine that they did not find a place was equivalent or similar to where they used to live and decide to only pay a rental equivalent for a $1000 one. This means that the additional cost of living would still be $400. The claimant would have to pay the difference of $1500-600=$900.
Things That May Be Covered by Additional Living Expenses Coverage
There are a numerous number of things that ALE coverage can cover; not only the rental costs are covered. These things are expenses that assist in maintaining a healthy lifestyle:
- Food or meals at a restaurant
- The difference of mileage of the original home to the new location
- The actual cost of the new location whether it is a motel, hotel, additional room in a home, apartment, or house
Storage fees for property (special circumstance)
- The rental of furniture that you typically have in your home and of importance like a bed, or refrigerator
- The fees linked with housing a pet
- The expenses for having to do laundry. The coverage will cover the costs that a tenant makes for having to do their laundry in an area outside of their homes that is char
- ging them money for the service; and
- Displacement and or moving costs
An evaluation will take place with regards to the way of living prior to and after of the claimant despite all the expenses that they acquire during the additional living expense phase. For example, if you are claiming Mcdonald meals, yet you ate Mcdonalds every day, those costs will not be recovered because it is something you previously did regardless of having to relocate or not. In other words, compared to your normal lifestyle’s costs.
Are There Any Limitations on ALE Coverage?
To anything in life, there are always limitations, and this includes ALE coverage. There are limits to a few things depending on which type and form of policy the holder has. Usually, these are the limits that will be seen on ALE:
- The dwelling limit on common homeowner policies is about 30%
- The limit for insured items or personal property for a holder who has a condo policy is 50%
- The limit for insured items or personal property for those who have a standard policy is 30%
These are only a few of the many policies in place for ALE limits. For this reason, it is crucial that each policyholder knows what which type and form of coverage they have. In each policy, the DEC page will have this information. If a policy has higher limits, the limits to the ALE may be increased as well. It is always better to be safe than sorry which is why knowing whether the additional living expense policy would suffice is essential for the carrier to determine.
Ensuring that You Obtain Maximum Benefits: Four Things Must Be Done
Everyone wants to be compensated fairly, right? Obviously. But if the correct steps are not taken, many things could be missed, and fair compensation would not occur. These are four things that each homeowner should do in order to maximize the number of benefits they are paid for an ALE claim:
- All receipts for expenses that have been made should be kept, including gas, meals, storage fees, furniture, and more
- Differentiate how the normal costs that you do are less than the current expenses you are having to do
- Have supporting documentation of the normal expenses that are made by you in order to clarify any questions that the insurance company may have
- To avoid problems in the future with specific expenses like special expenditure for storage, obtaining a written authorization from the company prior to doing so is a key asset.
- Not only does
a public adjuster want their client to make the best out of the worst possible situation they are having, but they also want them to be knowledgeable about what they can expect to see come from an ALE claim. It is wise to comprehend what will be covered and why when it comes to additional living expenses, that way, there are no surprises and everyone is a happy camper.
How ALE Coverage Settlements Should be Handled
Insurance companies should help homeowners to find similar homes to their own in nearby neighborhoods and to negotiate leases for them for the duration of time that they will need to stay in the rental properties. In order to make sure that the owner is being provided with sufficient amount of additional living funds during the time that the repairs are being done, the ALE policies should state open until repairs have been made. These are all instances that a public adjuster will make sure that it occurs. While “should” is the common word mentioned above, in most cases, it is “don’t.” Sadly, money has become the number one “important” thing for most companies; it is not about customer service or compassion anymore.
Have an ALE Claim you Need to File? Get a Public Adjuster Today!
Public adjusters work on behalf of the homeowners to protect their interests and ensure that all of their concerns, confusion, questions, and other issues are met throughout the claims process. They take care of all of the negotiations to ensure that the homeowners receive enough money to pay for the repair costs to their homes and for any additional living expenses that they must incur. If a factor outside of the homeowners’ control was the culprit for them having to leave their homes, the insurance companies should be in charge of paying for that. If the homeowners have additional living expense coverage, the public adjusters around you will work to ensure that the homeowners are housed in homes of a similar quality as their own until all of the necessary repair work is completed on their homes.
A public adjuster does not want the insurance companies to get the upper-hand, because that is what they will try to do. The maximum possible benefit amount is what they strive for. Public adjusters understand that these moments should not be made more stressful. In fact, it should be a moment where a policyholder has a peach of mind knowing that they will be well-taken care of.