|Q: There has been considerable and alarming damage to my home and we have been relocated. Can you explain how temporary housing works? Is the cost of housing separate from the repair of the sinkhole?
This is a common question with a very abstract answer. Generally, most homeowners insurance policies contain coverage for what we commonly call additional living expenses or ALE benefits. These benefits usually fit into a category we call “as incurred” benefits. This means that the money will not be paid out up front but will only be reimbursed as you spend it. It is a common misconception that if you have, for example, $10,000 in ALE benefits that means the insurance company will write you a check for $10,000 to go stay elsewhere. That is not the case. That means that once you begin paying to stay somewhere else, they will pay you up to $10,000 for those expenses. There is some case law that suggests that we are entitled to ask a jury to consider ALE benefits if the case goes to trial. This goes against the old school thought. We have not really received a clear answer to that question yet but I guaranty insurance companies still will stand behind the rule that they do not have to pay you until the expense is incurred.
Now the tricky part with ALE benefits is when do you actually get them? We started the discussion assuming that you were entitled to ALE benefits. To be entitled to these benefits essentially an engineer has to provide the opinion that it is necessary for safety, health or other reasons that you move out while the work is being done. The only engineer the insurance company has to abide by is their own. Now how often do you think the insurance engineer states you need to move out? Hardly ever and that is why these benefits are some of the most difficult to obtain. Furthermore, in your typical sinkhole repair plan no significant work is done inside the house. Almost all the work is outside which means it is difficult to justify why that work would cause health or safety concerns for the dwelling.