Exhausted ALE – Rebuilding Delays Due to Insurer, Contractor and COVID melodipasquale asked 2 years ago
Exhausted ALE – Rebuilding Delays Due to Insurer, Contractor and COVID

Thank you in advance for the opportunity to have my questions answered.

I lost the use of my home in April of 2021 due to a partial loss fire. I was relieved to learn that I was considered to have purchased more than enough homeowner’s insurance.

It took 3 full months – until July ’21 -to get an approval from the insurance company on a modest scope of work. Demolition and debris removal began and went on sporadically for about 3 months and then ground to a halt in October ‘21. The project manager (PM#1) claimed that code upgrades as well as labor and material shortages were causing delays.

After 7 months – November ’21 – with the house fully gutted, the project manager (PM#1) announced he was leaving my project. When the new project manager (PM#2) took over in November ‘21 he inherited a real mess. He seemed to have no information about the project from PM#1. For example:
• PM#2 and I were surprised when building materials ordered by PM#1 arrived on site, as I had not given my required approval.

• Under PM#1 appliances that were listed in the scope to be cleaned and reinstalled had been sent to the landfill.

• Historic and valuable trim and fixtures specifically designated by me to be saved were missing from the job site.

• Plans made with PM#1 for the addition of a bathroom and removal of a wall at my cost were not passed on to PM#2.

I had to start from the beginning filling in PM#2 on everything that had been discussed and understood to date. By that time it was late-December ‘21. None of the inherited issues had been resolved. In addition, PM#2 promised an estimate on the added bath and wall removal by mid-January ’22 but despite my very persistent and regular requests for even a rough estimate it was March ‘22 before he sent me anything.

In April ’22 a full year after the loss, my house sat in largely the same condition as it had been for the previous 10 months- gutted. In the meantime, housing costs in my zip code had increased a staggering 70% since the fire and my ALE funds were exhausted by April ’22. I appealed to my adjuster for additional funds more than once but was denied. Not only had the dollar amount of the funds run out, the adjuster explained to me that my time had run out too. Together, he and PM#2 decided that had it not been for the changes I wanted to make (the added bath and wall removal); the restoration of my home would have been finished by March’22.
Essentially, they claimed it was my fault that the house was still gutted a year after the fire. I pointed out that it had taken 3 months for an approved scope of work. I pointed out that progress stopped for months due to plumbing code upgrades. I pointed out that PM#1 left the job abruptly and a significant amount of time was spent ramping up PM#2. I pointed out the effects of the pandemic. These things were acknowledged but they would not reconsider their decision not to allow me additional ALE funds.

Here are my questions:

• Do I have any right to use some of the funds from the “code upgrade coverage” (purchased with my policy at an extra expense) to pay for extra housing costs that were the result of the time delay that the code upgrades created? Keep in mind that mid-2021 was the height of Covid shutdowns, labor shortages, and supply chain interruptions.

• What kinds of provisions exist for delays due to the global pandemic? Does the fact that all of this happened during the Covid “disaster state” allow for any special consideration at all? For instance, were any special federal, state or local consumer protections put in place for people like me attempting to recover from fire or similar disaster during the pandemic? Certainly labor shortages, supply shortages, housing cost increases, and the like significantly contributed to the delays that caused my ALE funds to be prematurely exhausted.

• Has there been any success in accessing additional funds or relief for others with circumstances similar to mine?

1 Answers
Jade Bentz Jade Bentz Expert answered 2 years ago

Hi Melanie, really sorry to hear about the issues you are having. Thank you for providing the detail you did. I’m going to answer your questions in line with the bullet points –

  • Code upgrade coverage is usually an incurred cost that can only be used for work that is required (per the code) and if the contractor is doing the work. So unfortunately since those funds are specified you wouldn’t be able to extend them to ALE.
  • Most definitely that contributed, we have seen it across the United States. Unfortunately I have not see where any additional allowances have been given by the insurance companies. They are still sticking to whatever is in the individual policies. You can contact the department of insurance and ask them if they have issued any bulletins on granting ALE extensions beyond what is on your declaration or in your policy that insurance companies are supposed to be following.
  • We have seen it be successful but only through litigation or rare circumstances. And if the contractor was your contractor, and not one hired by your insurance company, the insurance company will say they are not responsible. If the insurance company delayed unreasonably in paying/funding the job you may want to consider consulting with a first party property attorney but would need to consider the cost of litigation compared to what you are out of pocket. You could also have them review your contract with the contractor and see if they violated anything that could make them liable for the delays that they caused. If that isn’t a route you go, you can see if your insurance company has an internal appeal process or upper management review and give them a timeline of your interactions with the adjuster trying to speed it along and move forward, especially in those first 3 months.

Not sure if you have contents money from the damage but you can use that towards your living costs. However, it may impact your recoverable depreciation if you have any, and of course takes away from your funds to replace your contents.

Sorry this answer does not have better news for you. If you have any follow up please just let us know.