After the storm: How civil authority impacts ALE coverage

Coverage Q&A: Additional living expense (ALE) is often one of the first coverages triggered after a major weather event.

Traffic diverts around downed power lines Monday, Aug. 30, 2021, in Metairie, La., following Hurricane Ida. (Photo: Steve Helber/AP)

Every claim is different, and some insurance policies can be difficult to interpret for unique situations. FC&S Expert Coverage Interpretation, the recognized authority on insurance coverage interpretation and analysis for the P&C industry, makes it simple to find credible answers to your complicated coverage questions. Analysis brought to you by our FC&S experts. 

Editor’s Note: The insurance industry is currently working on recovery efforts in the wake of Hurricane Ida, including paying out claims as soon as possible to those affected. After a major storm, additional living expense coverage is a coverage policyholders often rely upon as they recover. In this week’s Coverage Q&A, we look at how civil authority impacts additional living expense coverage after a storm.

Question: My question is regarding civil authority language and its intended application toward additional living expenses (ALE). The client’s dwelling and homeowners insurance policies state the following:

“If a civil authority prohibits you from use of the Described location as a result of direct damage to a neighboring location by a peril insured against in this policy, we cover the additional living expense loss for no more than two weeks. We do not cover loss or expense due to cancellation of a lease or agreement.”

Parish officials in Louisiana have urged policyholders not to return to particular parishes due to water or low water pressure. We do not have evidence to confirm whether the lack of water is due to a peril insured under the policy.

My questions are: 

  1. Does this trigger coverage for civil authority?
  2. How is the amount determined? Is it based on reasonable expenses the insured has incurred?
  3. Do you have other subscribers who have presented this question in the past, and how have they handled it?

— Louisiana Subscriber 

Analysis: Following a storm, adjusters must sort out causes of damage and whether or not they are covered under insurance policies. Which coverages apply depends largely on the exact cause of loss — was it wind, water, are there any exclusions at play? With large disasters, actions of civil authority are often in play, and with people displaced, additional living expense coverage is also one of the first coverages to be applied. But even these coverages have requirements as to the cause of loss.

Answer: To learn the answer to this week’s coverage Q&A, please log into your FC&S Expert Coverage Interpretation account.

Related:

Recommended Stories