The President of the United States and the Insurance Commissioner of Louisiana have publicly demanded that insurance companies pay for customers' increased living costs in accordance with their homeowners policy. The editors of FC&S recently published an opinion supporting these requests.
I, Storms efterspel – Updated: Coverage for additional living costs, civil authority and business income will all come into play after a disaster FC&S noted:
Homeowner policy provides insurance coverage when a civil authority has prohibited the use of the "residential premises" due to direct damage to adjacent premises of a risk insured against, and coverage is provided for a maximum of two weeks. Coverage is also provided when a loss means that the "housing premises" are not suitable to live in as a result of a covered loss under additional life cover protection. Coverage is the shortest time required to repair or compensate for the damage, or if the insured moves permanently elsewhere. What does this mean for the insured who left their premises due to evacuation requirements from the authorities due to anticipated but not yet occurred damage and for the inability to return home due to the extensive loss of tools?
HO 00 03 excludes power outages if the power outage or other electricity network service takes place outside the "residential premises". There is an exception for a power outage that leads to a loss from a risk that is insured against the "residential premises"; the policy covers this loss. So if the power outage starts a fire, that fire is covered.
If an insured person was evacuated due to an order from a civil authority before any damage occurred, and there is no damage to the "residential premises" but the insured cannot return to his property because the power is off, is there coverage under extra living expenses?
In order for additional cost of living coverage to apply, there must be a loss covered in accordance with section I that makes the premises unsuitable for living in. Winds from the hurricane caused widespread power outages; wind is a covered cause of loss. Lack of air conditioning and power when the temperature is in the high 80s and 90s can be seen as making the premises uninhabitable; therefore, there may be coverage for additional living expenses.
This is much easier if the insured's premises were also damaged by the storm. If the insured's property is damaged, which makes the premises unsuitable to live in, additional cost of living coverage applies as described.
Apparently State Farm and some other insurers do not agree with FC&S editors. In White House Senior Advisor blows up State Farm to use loopholes to deny coverage to Hurricane Ida Victims cedric Richmond was quoted as saying:
… While some companies, such as Allstate and USAA, have agreed that cover some extra costs, State Farm has reportedly refused to cover any extra costs for homeowners who were not covered by a mandatory evacuation order.
"We have companies like State Farm, and I call them by name, who have decided that they will still use that loophole or the technical or fine print, to deny coverage," Richmond says. "People went for it was a storm bigger than Katrina. Then it knocked out the power [for] over a million people and southern heat, 102, 105 heating advice, and State Farm's position is that people could have gone home and lived in that house.
Biden urged insurance providers late at the end of last year last week to strengthen and cover additional costs without naming any companies, but Richmond specifically called for State Farm leadership.
"My opinion is that the CEO and management at State Farm should not stay in a house with damage without power in 105-degree heat," Richmond said, "and they should not expect Louisiana or Mississippi citizens. to do it.
State Farm seems to suggest that it pay some ALE claims but not all when they stated the following on their website:
When storms like Ida cause serious damage to homes, customers can be relocated. Additional coverage for living costs (ALE) under a policy for homeowners or tenants is triggered when a covered loss makes the home uninhabitable. ALE can cover certain increased costs such as housing, meals and mileage.
Some media reports incorrectly indicate that ALE does not apply without a mandatory evacuation order. These reports are apparently focused on part of our ALE coverage for affected policyholders: Prohibited use. We address the needs of displaced customers. State Farm pays, and will pay, thousands of prohibited uses and ALE claims to our policyholders after Hurricane Ida
For customers who have a loss covered by ALE due to the damage to their home, that loss adjustment occurs regardless of the type of evacuation order in their neighborhood. When a State Farm customer reports a claim to us, we will evaluate their damage. The process from there depends on many factors, including the extent of damage and availability of the property. (We work with local authorities for access when it is safe.)
We are here for all our customers and are determined to pay what we owe. State Farm policies in Louisiana, Northeast, and other states are archived and approved by state insurance regulators in each state. State Farm respects the terms of the contract with our customers. Changing the terms of the contract for an event would be unfair to anyone who has experienced loss from previous disasters. 1
I'm not sure what the logic is for not paying earlier if it was a wrong decision. Changing a culture of denial to make payments is actually good from the policyholders' perspective. In addition, changing the policy language to unambiguously demand payments for this type of loss seems like ISO and the National Association of Insurance Commissioners should require in standard form homeowners.
I have previously written that in the insurance requirements companies should subscribe to FC&S . In, Few judges and insurance regulators who worked in property claims: Understanding new depreciation decisions I specifically quoted how editors found coverage in situations where the insurance company refused to acknowledge any payment obligation. You can learn a lot from reading this insurance industry publication.
Thought For The Day
The preservation of one's own culture does not require contempt or disrespect for other cultures.  —Cesar Chavez