Does Cost for Certified Professional Estimate Qualify as a Covered Additional Living Expense? rdjmsy asked 2 years ago
Does Cost for Certified Professional Estimate Qualify as a Covered Additional Living Expense?

Our home was totally lost to the Colorado Marshall Fire on 12.30.2021.

We were advised by our Safeco/Liberty Mutual adjuster that we needed to obtain an “as-was bid with code upgrades broken out separately” and submit that bid to that same Safeco/Liberty Mutual adjuster, so that the claims team at Safeco/Liberty Mutual can review it in order to come to agreement on what they will pay for, to rebuild our home.

It was recommended, generally, during one of the uphelp.org webinar’s that we would be better served to at least attempt come to an agreement with our insurance adjuster before entering into any contracts with builders.

None of the home builders that we have spoken to have actually wanted to provide any kind of bid for the rebuild of our home until after we have entered into and completed their preconstruction contract and process, which process seems to include soils geotechnical engineering, site surveying, structural engineering, elections of interior and exterior package selections etc.

We learned about and then worked with a local Certified Professional Estimator (CPE), and paid $2700 for that estimator to work up and email us a detailed estimate of the costs to rebuild our home, that we lost to the fire, on the day that the home was lost, 12.30.2021.

We submitted the estimate document that we received from that CPE, and a copy of the invoice for that estimate that shows that we paid the $2700, to our Safeco/Liberty Mutual Adjuster who normally handles the intake for our Additional Living Expenses/Loss of Use coverage. That adjuster emailed back that he was referring the estimate, and the invoice showing that we had paid for it, to the adjuster that handles our home rebuild claim submission intakes.

We got an acknowledgment back, from that second adjuster, saying that the $2700 that we paid for that estimate would not be considered for payout until we had spent all of the money for the Main Dwelling A coverage that Safeco had already paid out – that they would consider reimbursing us for that $2700 once we got all the way through the Main Dwelling A coverage funds expenditure for the rebuild of home and into the Extended Dwelling coverage funding for the rebuild of our home. They further explained that we had to expend the whole of the Main Dwelling A coverage funding before they would be able to payout on any Extended Dwelling Coverage claims, or any Law and Ordinance claims – AND that those additional claims would only be paid out as they were expended.

We were more recently advised during an uphelp.org Survivor to Survivor forum that we should be able to get reimbursed for the $2700 estimate cost out of our ALE coverage funding.

I just emailed my Safeco/Liberty Mutual adjusters and asked if they could please reimburse the $2700 estimate cost out of our ALE funding. They emailed back to say no, and to reiterate their answer from before, as detailed above.

Should we have any reason to believe that Safeco/Liberty mutual is obligated to reimburse that $2700 out of our ALE coverage?

If so, what is the best way to go about trying to convince them to do so?

2 Answers
Chris Rockers Chris Rockers Expert answered 2 years ago
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Typical language in an Additional Living Expense provision is along the following: If a loss covered under this Section makes that part of the residence premises where you reside uninhabitable we cover Additional Living Expense, meaning the necessary increase in living expenses you incur so that your household can maintain its normal standard of living. Perhaps not obligated, but it is reasonable to continue requesting that Safeco reimburse you for the cost of a separate repair estimate which is/was a necessary increased cost you incurred. Safeco representatives may assert the cost is not a living expense – but “living expense” is not defined. It appears based upon information above, the carrier may consider issuing payment under the Dwelling coverage, yet costs to rebuild the home may exceed the Dwelling limit. Importantly – if there are communications in the file to support the adjuster actually requested or insisted that you submit a rebuild estimate, the request for reimbursement is even more supported – whether under ALE or a Loss Assessment provision. If the carrier prepared an accurate rebuild estimate – there would/should be no need for you to incur out-of-pocket costs for a separate estimate. Efforts should be to work cooperatively with carrier reps – if the rebuild estimate was submitted and resulted in the carrier recognizing/acknowledging costs are $50,000, $100,000 or more over the carrier’s initial estimate, the cost for the separate estimate was a worthwhile expense; carrier reps should look to assist insureds avoid out-of-pocket expenses. Good Luck.

Amy Bach Amy Bach Staff answered 2 years ago
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There is an argument that Safeco should reimburse that $2,700 as a claim preparation expense on the grounds that you incurred it to follow their adjuster’s recommendation and document the “as was” rebuild cost. You had to spend that money to cooperate with their request, and because they failed to fulfill their obligation to fairly and promptly adjust the loss. If you document that their as was estimate wasn’t accurate, and you couldn’t get a builder to give you a detailed estimate free of charge so you had to pay for the service.

Claim preparation expenses are typically covered in commercial losses due to specific language in commercial policies that allow the policyholder to get reimbursed for things like paying an accountant to value damaged inventory, etc. You don’t find that language in home insurance policies, but if the insurer has failed to execute their obligations under Colorado rules on insurance claim handling, https://codes.findlaw.com/co/title-10-insurance/co-rev-st-sect-10-3-1104.html they should compensate you for expenses you incur due to that failure. “Should” and “Will” are two different things, of course, but you can certainly make your best arguments, in writing, and seek help from CO DOI in getting reimbursed for this expense.

There’s an argument that, since your insurer did not accurately calculate the as was rebuild cost, then recommending you get someone to do that for them is a violation of this provision of the above-referenced code: (VIII) Attempting to settle a claim for less than the amount to which a reasonable person would have believed he was entitled by reference to written or printed advertising material accompanying or made part of an application.

That said, it might not be worth fighting over, and that was probably money well spent (assuming the CPE did a good job and came up with a reasonably accurate number), plus a good lawyer won’t be able to help due to the relatively low dollar amount at issue. So your best bet is to send a few letters, ask the DOI to help you get them to cough up that reimbursement or just move on and focus on getting a fair settlement on your overall dwelling and contents claims. Good luck!