Limiting ALE due to extra time required to design a bigger house Matt Stonesmith asked 1 year ago
Limiting ALE due to extra time required to design a bigger house

Our adjuster has let us know via letter that they feel our process of designing our home has been ‘delayed’ due to the fact that we are modifying the floor plan from that of our home that was lost in the Marshall Fire. The floorplan is different, and the house grew from 3285 sq ft to 3806 sq ft.

In a phone call, the case manager told us that if we had gone to an architect with the sketches provided in our statement of loss, along with picture of our home from social media, etc., we would have the design package submitted sooner than our current timeline.

The city of Louisville (very helpful) gave us a letter saying we were the 179th permit submitted. Out of 550 homes lost. I know not all homes will be rebuilt, but we are definitely ahead of the curve on this process. We received our permit in early January.

We tried to explain this, and also that most homes in the Marshall fire lost their foundation as well, so most people are changing the home to some extent or other. They ignored this saying only that it is a case by case basis.

We had been working through this discussion, and waiting to submit our plans per their request until we had better resolution. In the meantime State Farm collected our plans from the City of Louisville.

Now State Farm will undertake an ‘investigation’ to determine the duration it should have taken to design and build our old house, and determine how long it will take to design/build the new house. Our ALE time will be adjusted accordingly.

Please provide guidance on how we might address this situation. It seems totally out of step with everything we have heard regarding redesign and ALE. The exact language from their letter is below:

“Based on the above information, when altering the layout of the pre-loss structure to include additional square footage and the addition of a bathroom, it will require additional time spent determining a design to accommodate these additions. State Farm views the additional time spent making changes to the pre-loss floorplan as ‘delays’ as they are not necessary in order to affect the rebuild for which coverage was extended. As such, the additional time required to complete plans for your current rebuild, as opposed to the time necessary to draft plans for the pre-loss residence, will be viewed as an unnecessary ‘delay’ in reconstruction for which no coverage exists.”

1 Answers
Tom Henderson Tom Henderson Expert answered 1 year ago
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Matt, I’ve never before encountered this question. Seems like hairsplitting to me. How much additional time was actually spent coming up with a design with added square footage? Surely, from the standpoint of your design professional’s time, it didn’t take more than a day or two, at most.

There is no requirement in most policies to rebuild a carbon copy of what burned to the ground. So, I think it is unreasonable for an insurer to say they will only pay ALE for the length of time it would take to “design” an exact duplicate. However, there likely are some limits to what can be considered reasonable, in terms of increasing the size. I suggest asking your design professional to tell you how much shorter it would have taken her/him/they to design a similar square footage place vs. what you’ve ended up having designed, getting the opinion in writing, and sending that to the insurer. If it is another 2 days, then fine – you’re getting 2 days less ALE.

As for claims of increased length of time for approval from the City, I’d challenge the insurer to point to the basis of such a claim. I doubt they’ll be able to come up with one. I can’t imagine that someone in the building department is going to take a materially longer period of time to review (and hopefully approve) a set of plans that are to rebuild something different than was there before – they’re likely still going to take the same amount of time regardless.

Good luck!