What is an additional living expenses insurance claim?
An additional living expenses (ALE) claim is exactly what it sounds like. It will cover some or all extra of living expenses incurred as a result of a covered event. Generally, ALEs are measured as the difference between the insured’s normal living expenses and the extra living expenses incurred due to the insured loss. For example, if your home becomes uninhabitable for whatever reason, and as a result you must stay in a hotel room for a week, your insurer may be required to reimburse you for some or all of those expenses. A typical policy will require your insurer to cover no more than an amount equal to 20% of the insurance value of your home. Thus, if your home is insured for a maximum of $100,000, your ALEs will total a maximum of $20,000. Additionally, most policies will limit coverage for a certain amount of time. For instance, a typical policy provides that your ALEs will only be covered for a maximum of 1 month.
When Does My ALE Coverage kick in?
Before you will be entitled to receive ALEs, most policies require your dwelling to be “uninhabitable.” The specific requirement before your ALE coverage kicks in will depend on your specific policy, however, as a general matter, a home that does not have basic utilities like water, heat, or electricity will be considered to be “uninhabitable.” Once your ALE coverage kicks in, any expenses you have outside of those which you would normally incur will be covered to the extent of your policy limits.
What kinds of expenses can be covered?
Most types of living expenses, above and beyond your ordinary living expenses that occur as a result of a covered event, will ordinarily be covered by ALE insurance. Common examples include: hotel costs, car rentals, pet boarding, furniture rentals, laundry expenses and even costs associated with increased miles getting to work, school or church, restaurant meals can be covered if your kitchen is inaccessible.
However, because your insurance will only cover “additional” living expenses, your insurer will subtract the expenses you normally would have spent anyway. For instance, if you are claiming $1,000 in restaurant expenses as ALEs because of a damaged kitchen, but in the same time span you normally would have spent $500 on food, then your insurer will cover you for the additional $500 above and beyond your normal expenses. If your home is in fact uninhabitable, ALE insurance may cover your expenses for a comparable home.
How can I prove my Additional Living Expenses?
You must be able to demonstrate your “normal” living expenses as well as your “additional” living expenses. Your normal living expenses can be determined by averaging out your expenses in certain categories. For example, you may be able to determine from bank statements or credit card statements that you’ve spent an average of $1000.00 a month in food over the last 6 months or a year. As to your “additional” expenses, receipts or statements will generally suffice. Remember, when it comes to proving losses, the insured carries the burden of proof.
Proper documentation will always make it more difficult for your insurer to deny your claim. Saving receipts and keeping logs of your expenses may be the easiest way to prove your ALEs. Many insurers will provide you with a spreadsheet or log to make it easier for you to document your ALEs. Once you have documented all of your ALEs, it is best practice to file a claim with your insurer as soon as possible. Depending on your policy your insurer may even be required to cover your ALEs up front, rather than reimbursing you down the line.
Are there any kinds of limitations on additional living expenses recovery?
ALEs are designed to make the insured whole, and not to put the insured in a better place than they were before the loss. Thus, a typical ALEs provision will provide coverage for only those ALEs that are “reasonably necessary” in view of your normal living expenses. Thus, a person that spends an average of $20 a meal cannot “reasonably” expect their insurer to cover a 5 star lobster dinner for the next two weeks. Furthermore, ALEs must actually be incurred. If you stay with a relative and do not incur any extra lodging costs, your insurance policy probably will not cover you for the costs you would have incurred had you actually gone to a hotel for a week.
Why would my insurer deny my additional living expenses coverage?
When it comes to insurance claims, your insurer will always be looking for reasons to deny your claim. It is the nature of the business. An insurance company profits by paying out less money than it charges in premiums. You need to understand the language of your specific policy. Unfortunately, many times claims that should have been paid out are denied based on technicalities like time limits. As was previously stated, some policies work on a specified time basis. So if your policy states your insurer will cover ALEs for 40 days and your home is still uninhabitable on the 41st day, unfortunately you will have to foot the bill for that hotel room. Other reasons why your insurer may deny coverage include mistakes in filing your claim, or accidental misrepresentations. Whatever the reason may be, you may have been improperly denied your right to recover ALEs. It may be a good idea to consult with a professional that will help you better understand your coverage, and your rights under your policy.
You can reach Miami Insurance Claims Lawyer J.P. Gonzalez-Sirgo by dialing his direct number at (786) 272-5841, calling the main office at (305) 461-1095, or Toll Free at 1 (866) 71-CLAIM or email Attorney Gonzalez-Sirgo directly at [email protected].