The COVID-19 pandemic is challenging the Insurance Industry in areas of coverage interpretation that were not a component of the Underwriting and Rating process. Under a Residential Homeowner HO3 policy, how are the following scenarios responded to: 1.The home sustained a covered loss, prior to the COVID-19 pandemic outbreak, making the house uninhabitable and triggering ALE coverage for the Insured(s). Because of limitations in place, directly and indirectly related to the various Executive Stay-At-Home orders, contractor repair activity is taking longer than normal. This involves suspensions of service, and an extended repair time. Does the Additional Living Expense coverage under the policy respond to this delay, which increases the ALE cost of the claim?
2.The home sustains a covered loss, but the house remains inhabitable. The Insured(s) is seeking ALE coverage while the repairs are being made. Out of the fear of coming into contact with a potentially infected construction worker, even though the workers are taking the necessary precautions in compliance with CDC guidelines and social distancing, e.g.wearing masks, gloves and even protective clothing. Does the policy ALE respond?
3.The home sustained damage from a covered loss and became uninhabitable. The Insured(s) were placed in temporary housing and ALE coverage was provided. The repair to the house is now completed but the Insured(s) do not want to return to the house, since it is located in a 'hot-spot'. Does the policy ALE respond?
Washington Subscriber
1. Yes, ALE should cover the extended time to repair the property since neither the homeowner nor the contractor have any control over state orders, and what businesses are or aren't essential. Even if the repair work falls under an essential business, supplies may be unavailable, workers may be sick, or there could be other issues. Some insurance departments have expressly stated that in such situations ALE should be provided. https://www.nuco.com/fcs/2020/04/06/pandemic-recap-and-updates/
2. While I understand the insured's fear, if the contractors are adhering to all CDC recommendations, and the insured's can safely remain in different parts of the house from where the work is taking place, I don't see that it would be covered. However this is an unusual circumstance, and a carrier might be making an exception for such circumstances. I haven't seen anything on it, but it is possible.
3. No. Once the home is repaired, the ALE coverage ends. If the insured remains quarantined, even if the area is a hotspot, the insured should be safe. There have been no indications that people quarantined in their homes have caught COVID-19. Coverage is provided only until the home is restored to pre loss conditions.