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