AFTER A CATASTROPHIC FIRE LOSS: ADDITIONAL LIVING EXPENSE, DEBRIS REMOVAL & TREE COVERAGE

Posted By Mark E. Hancock || 12-Dec-2017

The Thomas Fire has truly been a catastrophic event in Ventura County. As of the date of this article, 800 structures have been burned, impacting many residents, psychologically and economically. Homeowner’s insurance can help with some of the economic impact and this article addresses some of the ways it can help. The plan is to follow it up with articles addressing the dwelling and contents. This article will, necessarily, be fairly general. It should be understood that insurance policies are contracts and they differ. The policy in each case has to be reviewed to see what it says and it could differ from the following.

ADDITIONAL LIVING EXPENSE (ALE)

Homeowner’s policies often contain coverage for loss of use. Additional living expense (ALE) is usually part of loss of use. The general idea of “additional” is that it pays for the increases in an insured’s living expenses caused by a covered loss so that the insured can maintain his or her normal standard of living. It doesn’t pay for the regular, pre-existing costs, such as a pre-existing mortgage, or the insured’s normal food bill.

Normal is the insured’s standard of living before the loss. If an insured lived in a 2,000 square foot, 3 bedroom house before the fire, he or she would want to argue for a rental home of that size and he or she would have support for that. Certainly to the extent that the insured continues to pay their pre-existing mortgage, the rent on this comparable home is ALE. Be aware that an insurance company may check to make sure you are actually living in a home you are asking them to pay the rent on.

Please keep in mind that there may be time limits on how long an insurance company will pay ALE and that the dollar amount of it may be capped (sometimes at 20% of the dwelling coverage). You and your contractor, if your decision is to rebuild, should be very aware of the time limits from the outset.

DEBRIS REMOVAL AND COVERAGE FOR TREES, SHRUBS AND PLANTS

In addition to coverage for one’s dwelling and contents, Homeowner’s insurance policies often also contain additional coverages for debris removal and for trees, shrubs and other plants. Given that the Thomas Fire burned houses and trees to the ground, and created a lot of debris, these are important coverages, which should not be overlooked.

The policy might provide that, in cases of total loss, debris removal might increase policy limits, by, say 5%. Tree coverage might be additional insurance, capped at a maximum of say 5% of dwelling coverage and $500 per tree.

Policies often provide that they will pay the reasonable costs actually incurred for debris removal. Given that there is some reasonable concern that the debris can be toxic, you may want to look into having the work done, not by your gardener, but by a contractor who can address and mitigate that toxicity and that certainly might be argued to be reasonable.

Given that the policy may provide that such costs can be in addition to normal limits, it might not be reasonable for an insurance company to offer you only policy limits, especially in the case of a total loss. Remember that you remain (until you are able to sell it) the owner of the underlying land and you may not be able to take the money and just walk away. Remember also that if you had numerous mature fruit trees, oak trees, and/or palm trees that burned up, these losses are real losses you have suffered and you should be compensated for these too, particularly where the coverage is additional to your regular policy limits.

Mark E. Hancock is an Attorney in Ventura, CA, with education, training and experience in many types of insurance, including property and casualty insurance, who advises and represents insureds in claims with their insurance companies.