A common theme I have noticed lately is the tendency of homeowners, having just weathered a major natural disaster, to compare their ability to recover insurance proceeds to that of their neighbors. Wondering if you can recover alternative living expenses? Curious to know if you can recover for your sewage back-up claim? Rather than looking to your neighbor’s recovery for answers, make sure to check your homeowners insurance policy.
I often receive calls with these inquiries. For example, I recently spoke with a woman whose townhome had incurred windstorm damage. She was inquiring about her alternative living expenses (“ALE”) also commonly called “Loss of Use.” The woman was upset because she had witnessed many of her neighbors receive ALE proceeds from their insurance carriers following the same windstorm event. However, when I inquired where she had been staying since the windstorm occurred, she informed me she had stayed in her townhome. Very likely, the reason she was not eligible to receive ALE was because she was able to stay in her townhome and incurred no additional expense for living due to the peril or covered loss.
Generally, your homeowners or renter policy will pay for you to stay in a motel, hotel, or alternative living arrangement if you are unable to stay in your home because of loss from “a covered peril.” Not sure if you might qualify? Ask yourself the following:
- Is my home uninhabitable?
- Did I incur this expense because of the loss event or covered peril?
- Am I unable to stay in my home?
If you answered yes to any of these questions, review your ALE coverage to determine what your policy allows. In addition to temporary housing and living, ALE will sometimes cover mileage driven for increased distance, moving costs, pet-boarding costs and reconnection fees for setting up services such as cable and telephone. Be mindful that payments are made based on provisions specific to your policy—make sure you review an understand them. It cannot be said enough: To determine the coverage applicable, you will need to review your policy.
As an additional example, a woman called me to inquire about her potential sewage backup claim. She informed me that several homeowners in the neighborhood successfully recovered on their sewage backup claims following flood damage to their homes—even though they may or may not have had flood insurance. Just as the previous example, it will depend on your individual policy (or policies) and the coverage you have.
After a thorough review of this homeowners policy, I discovered she was specifically precluded from recovering on her sewage backup claim. Why? This woman’s policy contained an endorsement in which recovery for sewage backup would be excluded where the inundation of flood waters entered the home. Unfortunately, this homeowner could not recover the same as her neighbors had because of this endorsement.
While these are two of the many examples I have come across, the answer is largely the same when a policyholder seeks the same recovery as their neighbor—it will depend on your policy. Understanding your policy coverage, the conditions, the endorsements, and other provisions that may affect your recovery is crucial. If you need assistance determining if you have coverage for your loss, contact an experienced insurance professional to review your policy.