Tina Jackson, ALE Housing Solutions National Account Manager, continues our series of posts regarding questions relevant to loss of use claims. Tina addresses two common scenarios regarding the insured utilizing their policy’s Additional Living Expense (a.l.e.) over opting to receive a Fair Rental Value (FRV) payout.
Note: As a general rule, when a policyholder is requesting payment for Additional Living Expenses, not all requests are covered, and they must meet certain criteria before they get paid. Of course, we suggest comparing our answers to your specific Additional Living Expense policies.
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Q. A family rents an apartment for one year at $1,000 per month with the full knowledge that there is a one-month lease break fee. After five months, the family’s damaged home is repaired and ready for them to move back in. Does insurance cover the fee?
A. The early termination fee would be a covered expense as the homeowner would not need to pay it as part of their normal living expense. Signing a one-year lease would typically allow the policyholder/insurance company to take advantage of a lower rate from the start of the lease. Paying a termination fee once the policyholder can move back into the damaged residence may be more cost effective than signing a short-term lease and paying a premium. In my experience, the average 3-month lease term is extended at least once due to unforeseen delays in the repair process. Each extension on a short-term lease is subject to a short-term premium. To alleviate the issue, the insurance adjuster could agree to a one year lease with a termination fee.
Q. The family has a live-in nanny. Will you pay for a separate hotel room for the nanny?
A. Additional Living Expense is typically extended to any “member” of the family that lives in the home at the time of loss. So, nannies living in the damaged residence at the time of loss would be covered under the policy for the additional living expense. If the live-in nanny had their own room in the damaged residence, they would be allowed a private room in a temporary residence (in most cases depending on the coverage amounts), be it a hotel or longer-term temporary housing. Each insurance company handles these situations differently, and it is something you should discuss with your insurance adjuster.
I LOVE MY JOB because “Working at ALE Solutions has been and continues to be a blessing in my life! I work with an awesome group of people, and the leadership is wonderful! I have built strong relationships inside and outside of the office.” – Tina
