Insurance coverage Q&A: Additional living expenses and mileage reimbursement
Can a carrier limit the amount it reimburses a home insurance policyholder for miles driven while a property is being repaired?
PropertyCasualty360.com editor’s note: 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. The following letter was edited for length and clarity.
We are involved in a claim with an adjuster from Nationwide on a water loss. The insured was put in a hotel a considerable distance from the home. The policyholder put together a very detailed log of mileage.
The carrier is refusing to pay anything other than 22 cents a mile (medical/moving rate) for those miles and is limiting to one round trip a day. The insured has animals at the loss location as well as a child in school and has often (if not daily) had to make more than one trip.
Can they limit the miles driven or “choose” which rate they want to pay?
Please see our request below: “Item number 4 of our communication: Mileage documentation for dates to the end of December has been submitted as attachments here as well.
“I am not certain where you have come up with the figure on the estimate of Jan. 13, 2023, but the insured is not in agreement with your calculation nor the rate of 22 cents per mile. For most of 2022 the rate was 58.5 cents and for the last six months of the year the federal rate saw an increase to 62.5 cents per mile.
“Please reimburse as submitted or provide explanation and policy language as to your calculations.”
The carrier returned with the following explanation: “The policy states: 1. Additional living expense If a loss covered under Section I makes that part of the “residence premises” where you reside not fit to live in, we cover any necessary increase in living expenses incurred by you so that your household can maintain its normal standard of living.
“Payment will be for the shortest time required to repair or replace the damage or, if you permanently relocate, the shortest time required for your household to settle elsewhere. Payment will not exceed the actual loss sustained or 24 months from the date of loss, whichever occurs first.
“The IRS rates are reviewed and used as a guideline. There are three categories: Business, medical/moving and charitable. The rates from July 2022- December 2022 where Business 62.5 cents, medical/moving 22 cents and charitable 14 cents.
“As this is not a business (employer/employee) situation the medical/moving would be the appropriate utilization in this situation. The medical/moving rate has not changed for 2023. There are no changes for this item.”
— Indiana Subscriber
First, the IRS reported that the moving rate only applies to qualified active duty members of the armed forces. Unless the insured is an active duty member, the business rate should apply.
If the insured needs to take the children to the bus stop and pick them up from the bus stop as well as tend to animals left at the residence, the carrier’s position that it will pay for only one trip a day is unreasonable. The children going to school and the pets being fed and cared for are part of the insured’s normal daily routine.
The insurer has the option of locating the insured closer to home in facilities that will allow pets if it wants to cut down on transportation expenses. But the insured has children and animals, and ensuring that they are taken care of and educated are part of the policyholder’s normal standard of living. Children need to both go to school and return home and dogs need to be let out multiple times a day.
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