Earthquakes, floods and even wildfires – California has no shortage of destructive natural calamities. It’s easy for these catastrophes to cause significant damage to your home, and you may even have to evacuate if conditions worsen. Severe property damage caused by disasters can leave your home unfit. In such cases, your insurer would not only have to cover just the repairs needed for your property, but also pay for your temporary living expenses while you wait for the crews to finish.
While homeowners’ insurance policies typically limit how much and how long you can receive additional living expenses (ALE) payments, there might be occasions when your insurer abruptly cuts you off from ALE coverage. Why would your insurer do this, and can you sue them?
Reasons for dropping ALE coverage
Your insurer might be dropping your ALE coverage for the following reasons:
- Your ALE coverage has hit the limit: Insurers usually cap a policyholder’s ALE coverage at 20% of their home’s insured value, though coverage limits may vary by carrier. Your insurer should be communicating to you any limits it has on ALE coverage.
- Excluding or reclassifying certain temporary living expenses: Your insurer could be reclassifying certain ALE so that it doesn’t have to cover them. For instance, you might want to use the payment as a security deposit for your temporary home, but your insurer might insist it doesn’t fall under ALE.
- Financial issues: If you’re filing insurance claims for disaster-related damages to your home, chances are that many other homeowners are doing the same. Your insurer might be overwhelmed by the sheer number of claims it has to pay and may have to put a hold on payments.
Your insurer might also come up with other unreasonable explanations for why it can’t cover or must stop covering your ALEs. In such cases, consider filing a lawsuit.
When to file a lawsuit
Generally speaking, if your insurer threatens to end ALE payments before you can move back to a habitable home, you can sue them for either unreasonable conduct or bad faith.
Suing your insurer for bad faith can be a complicated process. You must prove that the carrier withheld the benefit and that their decision to hold back from paying lacked reasonable cause. To make it easier for yourself, consider hiring an attorney with experience in protecting insurance consumers’ rights. An attorney can help negotiate with your insurer and, if it comes to it, take your case to court and fight for your right to compensation.