Our home was a total loss in a wildfire. For two months after the fire we lived in a hotel and Allstate paid the expenses from our ALE. The next 8 months we rented a house and Allstate paid the rent from our ALE. We then asked our adjuster if they would pay us ALE if we moved into a rental house that we had owned and rented for several years. They said they would so we gave our tenants notice and moved into the house. When we asked Allstate to pay us as they told us they would, they said they would not pay us ALE because the rental house was not covered for “loss of rent” and that it did not suffer any direct loss. For over a year we told them we agreed; we did not have that coverage on the rental house and it did not suffer any direct loss. We asked for ALE from the coverage we did have on the house that burned. Allstate then changed their reason for not paying us anything from our ALE account of $175,000. They said they could not pay it for a house we owned, in spite of the fact that they told us they would pay. It has now been 17 months since they have given us a single penny from our ALE account. Aren’t they obligated to pay us for our living expenses?
The excuse the insurer presented about lost rents coverage on the rental home is a red herring. It is disappointing to hear that the insurer stooped to that low after promising to pay Additional Living Expenses to make up for your foregone rent. You may have recourse here.
Additional Living Expenses per the usual contract terms have to be “incurred” before being paid back by the insurer. So if you write a check for rent, they have to send you a check in that amount after. If you own the rental under an LLC or another type of entity, you can pay rent to that entity as your actual expense. If that is not the case, you can try to argue the insurer is defeating coverage based on a technicality, as your expense is just on a different side of the ledger — it is a loss of rental income, as opposed to an expense.
You likely have a case for “promissory estoppel.” This means that you relied on a promise by the insurer that they would pay ALE in the form or your foregone rental income, and you relied on that by terminating your tenant and moving in. You only did that because you thought the carrier would pay you the lost rent as ALE. Those facts could get you reimbursed the lost rent. However, that is a legal argument, and you may need to bring in counsel to support if the adjuster does not budge.
Please note, an attorney would need to review the entire facts. These opinions are just based on the information you provided and you should consult with legal counsel to learn more. Also, please note you have time limits to bring certain legal claims, so you should act quickly to delve into your options.