If a home insurance company overpays on a ALE claim (their error, and claim paid based on all receipts submitted), can they then apply that overpayment to other aspects of the policy such as contents or dwelling without notification to the insured? Or can they only apply ALE overpayment to future ALE portions of a policy? My understanding is that policy limits are not interchangeable, and that you can’t transfer money between dwelling portion, contents portion, and ALE. I believe this is a case of estoppel where an insurance company is acting in deceptive practice. Would appreciate any insight.
Sapna Amin asked 2 years ago 1 Answers
If the insurer overpaid your claim in error but caught it and explained it to you, they have the right to ask you to return the overpayment. If they instead applied it toward another category of loss/coverage so you didn’t need to go to the trouble of refunding the overpayment, that seems like a reasonable way of solving the problem. An error does not necessarily give rise to an estoppel claim. If, for example, they agreed to pay a monthly ALE rental of $3k, and based on that you signed a lease obligating yourself to pay $3k a month, that could be a different scenario and you could argue they were estopped to renege on the $3k monthly payment – since you’d signed the rental contract in reliance on their agreement to pay that amount on an ongoing basis. But if they simply made an error and attempted to rectify it without troubling you for a refund – that doesn’t seem deceptive. If we’re missing something, please add details.
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