As we near the end of this Additional Living Expenses (ALE) blog series, we can reflect back at past case law and point out there are not only negative exceptions that impact an insured. Sometimes exceptions reflect positively that aid the insured on recovery where ALE is owed to the insured due to an uninhabitable residence after a loss.
Typically ALE recovery calls for records with tremendous detail to satisfy the insurer that the ALE is “incurred.”
There are times that an insured has gone through great length to stay on or near their property to their own detriment most of the time. In these instances, the insured has attempted to save the insurance carrier monies on ALE thinking that by doing so, their actions will reflect positively to the carrier and they will have a faster payout on the real property loss. For example, an insured might stay at a relative’s home at a reduced rental rate. Usually such actions of “saving monies” for the insurer do not pan out to aid the insured as they attempt not to “incur” great expenses to trigger ALE coverage.
Happily, in Error v. Western Home Insurance Company,1 an insured could recover ALE for loss of use of her home while it was being repaired, even though she did not incur additional rental, because while the property was being repaired, she lived in a trailer she already owned and parked on her property. The court reasoned that the insurer otherwise would unfairly benefit, and even awarded the insured ALE for meal expenses not proven by receipts, where the insured testified about the normal sum she spent on food compared to what she estimated she spent eating out during the repairs, with the court awarding her the difference as ALE.
Other times, insureds that pay in cash for ALE find that the burden of proof to the insured for “incurred” expenses is difficult with written receipts. Many vendors such as landlords or smaller stores may still write receipts by hand and such receipts are often questioned by the insurer in an examination under oath (EUO). During the time of EUO, the insurer’s representative often asks so many questions of the insured on payment on how cash was obtained that it intimidates the insured. Luckily, in Fishel v. Yorktowne Mutual Insurance Company,2 the insurer remained obligated to reimburse the insured for ALE incurred even absent receipts where the insured acknowledged the ALE arose from an insured loss, and the insurer knew of the insured's dwelling damage and was aware that other living quarters would be necessary during the time the dwelling was uninhabitable. Further, the insurer did not dispute the reasonableness or amount of ALE claimed.
Procuring payment for ALE coverage is not an easy task when an insurer makes the demand of detailed proof that the insured has spent more than what they would have had the loss not incurred. Many insureds cannot afford double what they normally spend in everyday life only to wait for a reimbursement from the insurer after a loss—which is already a financially draining situation.
Knowing that courts are made up of real people and that some courts can understand that when ALE is owed to the insured, not surprising courts have supported the insured when receipts for food, etc., are not always kept or pristine. It’s the word of the insureds and their own testimony of their expenses that can make a proper presentation when holes occur in the keeping of records during the insureds’ time of need after a loss.