Over the course of this ALE blog series, I've presented the predominate case law around the country that impacts the payment of ALE. However, when it comes down to the actual payment of ALE, it's not the case law that is the driving force for the actual payment of ALE to an insured after a loss. ALE payments are dictated and paid out by the insurance company pending the approval of the adjuster on the file of the loss. There are times when an insured is extremely frustrated when ALE remains unpaid and the insured is stuck paying both a mortgage and an unexpected rental property while the insurance company maintains that ALE. I wanted to take this opportunity to point out a few trends that I am observing when it comes to the payout or withholding of ALE benefits by the insurer.
More often than not, insurance carriers are insisting that ALE is only paid for the period they deem as the period of restoration. In essence, a disagreement during the adjusting process is not being accounted for by many insurance carriers as time when ALE should be paid. Although I often ask the carrier to put this opinion in writing when the continuation of ALE payments are incurred and requested, insurers are reticent to put this into writing. I strongly suggest that if you are advocating for the insured, that these conversations are documented into writing if the insurer refuses to back up their statements in a letter or email.
Insurers are increasingly utilizing special investigations units (SIU) in the investigation of the insured as to whether ALE should be paid or withheld. Specifically, insurers are deeming the payment of rents to family and friends for lodging as a red flag worthy of scrutinizing the insured's motives. In times of need it seems logical that an insured would stay with a family or friends or even be referred by family or friends to stay somewhere that is known to them. When this happens, many insureds find they are being subjected to very specific recorded statements and examinations under oath as to how they obtained their alternative housing.
Handwritten receipts and cash payments for ALE are also red flag for insurers for further investigation wherein insureds are subjected to long and lengthy examinations under oath and document requests to substantiate that ALE is actually incurred. I've seen and attended many examinations under oath where insureds are subjected to long winded questioning and document productions that ask for an entire financial history over one cash payment or receipt that is handwritten for rents versus one that is generated by an short term housing company. I strongly suggest that those who represent insureds provide a roadmap for expectations of ALE payments and that ALE receipts and monies incurred are kept separately. I've heard a few attorneys and public adjusters indicate that a separate credit card or account is used for ALE purposes so that it is easier to point out a clean money trail to the insurer for incurred expenses for reimbursement.
ALE payments are crucial for most insureds who have suffered losses and the average person cannot afford paying both a mortgage and an additional temporary home without serious financial burden. Therefore delays in ALE payments can be the cause of extreme hardship to a family that suffered a property loss. Navigating a claim and knowing the current ALE red flags and trends amongst insurance carriers will hopefully help insureds recover ALE in the midst of their claims.