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driftwoodjack
12 Posts |
 Posted - 04/18/2003 : 10:31:09
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Linda, are you saying that in cases where two or more claims were opened by the adjuster that could result in 20% for each opened claim?
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JimF
USA
1014 Posts |
Posted - 04/18/2003 : 15:23:02
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Memo to DJ: No, I don't think that is what Linda is saying at all. The insurance policy is for indemnification of a loss, not for profiteering by an insured. There is no simultaneous payment of ALE when a loss is caused by two perils concurrently or sequentially. ALE would pay for restoration for a period of up to 24 months under the new policies or 20% of Coverage A under the old policies. Should a second loss from a covered peril ensue during the period of the restoration from the first covered loss, the clock 'could' (not 'would') be reset for another ALE period for up to 24 months should the severity of the 2nd loss be such that an insured was forced to vacate their residence because of it's inhabitability.
Linda, if I am incorrect in my understanding of what you are saying, please advise, but that is my interpretation of policy on how ALE would be handled should a second covered loss occur sequentially. |
Edited by - JimF on 04/18/2003 17:29:46 |
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driftwoodjack
12 Posts |
Posted - 04/18/2003 : 16:12:20
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JimF - It would seem to me to be a biased assertion to even suggest that a second ALE claim would automatically be for “profiteering” as you suggest. I hope you are more objective with your clients.
To help clarify the matter we are talking about the 20% clause per claim. I am fairly certain the Insurance Commissioner of Texas ruled against Farmers when they tried to refuse ALE payments when Farmers opened a second claim and the home was still uninhabitable.
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JimF
USA
1014 Posts |
Posted - 04/18/2003 : 17:10:06
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Memo to DJ:
Ok, let's go back to your original question: Are you saying that in cases where two or more claims were opened by the adjuster that could result in 20% for each opened claim?
Perhaps your real question was unclear or I read it the wrong way?
I can only assume that if more than one claim was opened by an adjuster or an insured on the same risk, that more than one claim was opened to report damages from one or more 'covered perils'. Is that fair so far and if not, why would either claim be opened were the loss not from a covered cause of loss?
Secondly, if two distinct causes of loss, OR the same cause of loss caused first one damage event and then another, the losses would either be concurrent or sequential. Is that a fair asssumption and if not, please explain otherwise.
My response in the earlier post stands as the way a second loss, concurrent or sequential would be handled and how ALE would be applied under an insurance policy.
I'm sorry, but I read your question as if you were asking could an insured receive two SIMULTANEOUS sets of ALE benefits when and while there are two open claims, and my answer to that is NO.
I do not believe that my answer in any way is "biased" as you suggest, but is merely the proper interpretation and application of ALE benefits under the HO policies. I was further, merely reminding readers that any payment or receipt of 'double benefits' for the same damage or coverage under an insurance contract would amount to a violation of the indemnification principle of insurance, which is to say, an insured is indemnified but is not allowed to 'profit' from a policy, and your question seemed to me at least, to beg the question of double benefits for simultaneous ALE payments.
Now you go on further to say in your response to me: It would seem to me to be a biased assertion to even suggest that a second ALE claim would automatically be for “profiteering” as you suggest
My question to you is this:
WHY would a second claim for ALE be opened at all if the benefits for ALE for the first claim had not expired at any point short of either the exhaustion of 20% of Coverage A OR the elapse of 24 months under new policies?
Quite frankly, I can see no reason, other than 'automatically' concluding that an insured seeks to 'profit' by filing a second claim for ALE while the first claim ALE is still running.
Perhaps you can suggest any OTHER reason than profiteering by an Insured for doing such, but honestly, I see none!
In the end, I was suggesting that the correct answer to your question is that no insured is entitled to double benefits for a simultaneous or concurrent loss under ALE.
Again, I suggest that would be a violation of the principle of indemnity and if an adjuster somehow let such a situation slip through the cracks by mishandling a claim, receipt would constitute insurance fraud as well.
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Edited by - JimF on 04/18/2003 17:38:23 |
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driftwoodjack
12 Posts |
Posted - 04/18/2003 : 17:54:42
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I can see by your response that I failed to be specific enough for a comprehensive response.
The issue was mold damage caused by two separate burst pipes. The adjuster opened two separate claims and itemized the repair work separately. The ALE was not itemized separately. ALE ($28,000) was paid on the first claim. ALE on the first claim has now run out and the mold damage (peril) fully covered by the homeowner’s policy has yet to be successfully repaired even though the insurance company has paid out over $91,000 (including $28,000 for ALE). The house has failed 4 clearance tests to date. According to the CIH hired by the adjuster, the house was not safe to occupy as the first claim for ALE ran out.
In a case such as this, where the adjuster opened two independent claims, is it reasonable for the insured to be granted ALE compensation on the second claim.
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JimF
USA
1014 Posts |
Posted - 04/18/2003 : 17:59:43
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What was the Date of Loss (DOL) for each burst pipe claim?
What was the 'peril' which caused the pipes to burst?
Which policy form was in effect and in what state?
Why did the adjuster open two separate claims?
Does your policy specifically cite 'mold' as a 'peril' or as damages ensuing from a peril?
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Edited by - JimF on 04/18/2003 18:02:37 |
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Jim Lakes
USA
37 Posts |
Posted - 04/18/2003 : 18:06:05
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Dear Driftwoodjack,
We appreciate your questions on this site and are happy to respond to them.
I think one mistake that almost everyone makes is that they think that this is an “additional” coverage and that since they have coverage for this peril that they automatically get the additional coverage payment.
As Linda and Jim have stated the new policy states:
"When a loss Insured caused the residence premises to become uninhabitable, we will cover the necessary increase in cost you incur to maintain your standard of living for up to 24 months."
The key words here are: “NECESSARY INCREASE IN COST YOU INCUR.”
This doesn’t mean that you get an automatic 20% more or any other amount of your policy. It means that you can only receive what you would have to spend, “OVER AND ABOVE” what you would normally spend at home. In other words if you spent $200 per week for groceries at home and it cost you $200 per week to eat out, while you wore out of your house, you get NOTHING. I doesn’t matter if you have 1, 2 or 10 losses all at once. That amount is determined by what you normally spend at home, subtracted by the amount you INCUR to maintain YOUR STANDARD OF LIVING while out of the house, up 24 months, IF ANY. If you have another loss or several losses, that amount does not change, unless it goes outside that first 24 month period. .
I hope this helps clarify your question.
Jim Lakes, RPA
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driftwoodjack
12 Posts |
Posted - 04/18/2003 : 20:29:31
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Jim & Jim – The Texas USAA coverage in affect at the time of the loss did not have a 24-month provision. I have stated that more than once in this thread. The policy in affect had a specific ALE amount listed for each claim. The insured value of the property was $140,000 and the ALE was listed at 20% or 28,0000. In addition, the adjuster did determine the perils (two burst pipes leaking into the crawl space) were covered losses, the policy in affect provided for the clean up of mold damage, and so far USAA has paid for the unsuccessful remediation.
The policy did provide for maintaining the current standard of living and the issue of multiple claims does apply here. My question was based on the factors stated above. In a case like this, where the remediation has been unsuccessful, and the adjuster has opened multiple claims, is it reasonable for the insured to expect ALE on the second claim after the ALE on the first claim has been exhausted.
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JimF
USA
1014 Posts |
Posted - 04/18/2003 : 20:33:32
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Again, please share with us the Date Of Loss (DOL) for each of the separate claims events, and then I'll take a stab at answering your question.
Jim and I (as well as Linda) were pointing out that under the old policies ALE was limited to 20% of Coverage A and under the new policies the limit is a 24 month period, and we (Jim and I) were not sure whether your losses were under the new or old policies, thus our reasoning in discussing both approaches. |
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driftwoodjack
12 Posts |
Posted - 04/18/2003 : 21:57:09
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Jim – I don’t know how to word it more clearly than my last post but I will try. The DOL was 4-3-2002. THERE WAS NO 24-MONTH ALE ON THIS POLICY. THE ALE ON THIS POLICY WAS BASED ON 20% OF THE DWELLING COVERAGE. THE DWELLING COVERAGE WAS $140,000. THE ALE WAS $28,000 (20%).
I hope that clarifies the ALE coverage.
Let me state the facts again. Under the above mentioned coverage the USAA adjuster did determine the perils (two burst pipes leaking into the crawl space) were COVERED LOSSES, the policy in affect provided for the CLEAN UP OF MOLD DAMAGE, and so far USAA has paid for the UNSUCCESFUL REMEDIATION.
The policy did provide for maintaining the current standard of living and the issue of multiple claims does apply here. My question was based on the factors stated above. In a case like this, where the remediation has been unsuccessful, and the adjuster has opened multiple claims, is it reasonable for the insured to expect ALE on the second claim after the ALE on the first claim has been exhausted.
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JimF
USA
1014 Posts |
Posted - 04/18/2003 : 22:22:07
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If the Date of Loss (DOL) was the same for both opened files, then the answer is NO, you would not be entitled to ALE for more than one policy claim, as there is a concurrent running of ALE benefits. Otherwise you would be 'double dipping' which as I pointed out earlier, would be in violation of the principles of indemnity.
I further would ask what the time period was for the remediation under which ALE was paid? In other words, from the DOL, how long before the ALE benefits of $28,000 were exhausted?
$28,000 is a lot of money for ALE benefits for "increased living expense" for a loss under a Coverage A limit of $140,000, and on the face of it, would suggest a rather lengthy period of restoration/remediation occurred in order to exhaust $28,000 in ALE benefits.
And further, did you select the remediation contractor or did the carrier select the remediation contractor?
It is beginning to sound as if you could/should bring a legal action against the mold remediation contractor for failure to perform satisfactory services.
Why has this house failed 4 inspections?
You also mention that the ALE was determined without itemizing the costs. How is it possible to arrive at an accurate application of ALE benefits without doing that? (As a note, it sounds as if the carrier just went ahead and paid the total benefits for ALE without requiring itemization and without following the proper application of determination of actual increased costs of living expenses.)
Was this a carrier staff or independent adjuster?
Please advise.
Just for the record, I DO UNDERSTAND that the ALE benefits under this scenario are under the provisions of 20% of Coverage A, and NOT under the 24 month rule under the new policies, if that helps in your understanding of my analysis. |
Edited by - JimF on 04/18/2003 22:37:45 |
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driftwoodjack
12 Posts |
Posted - 04/18/2003 : 23:38:45
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No! The dates of losses are over thirty days apart.
The ALE was exhausted from April 3, 2002-December 31, 2002. And yes the period is lengthy.
The USAA adjuster selected the remediation company from their list of preferred companies and directed the remediation effort.
As far as legal action is concerned I have filed suit against USAA, USAA adjuster Patrick Koester, and Restoration Specialists of Dallas Texas.
You ask, “Why has this house failed 4 inspections?” Because the adjuster directed remediation effort failed to effectively clean up the contamination. His efforts were designed to temporarily paint over the mold (similar to the ED McMahon case) in an effort to pass a clearance test and to minimize the cost to USAA. It didn’t work and it forced me into litigation. As a USAA policyholder I have always had great faith in USAA. I can assure you that legal action causes me great discomfort.
I did not suggest that ALE was determined without itemizing the costs. It was!
The adjuster was one of USAA’s hired guns that specialize in mold claims.
You can visit the website I put online at http://usaa-mold.com and learn more about the methodologies USAA used and why they failed to remediate the problem in an effective manner.
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JimF
USA
1014 Posts |
Posted - 04/18/2003 : 23:45:09
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Ok, Thanks for providing further information for consideration.
Now, I have to ask. You say that $28,000 in ADDITIONAL or INCREASED cost of living was exahusted between April 3, 2002 and December 31, 2002 which rounded accounts for 9 months which would mean your INCREASED or ADDITIONAL expenses were over $3,000 per month. Just out of curiousity, what costs accounted for such a large INCREASE in monthly cost of living. Not to be nor sound pedantic, but ALE is not responsible for payment of your regular monthly costs of living, but just those INCREASED costs due to temporary housing replacement elsewhere, and $28,000 seems at first glance, to be a lot of money for such a 9 month period.
Finally, did USAA pay the entire $28,000 ALE up front, or were you required to incur the costs first, and then have USAA reimburse you on a monthly basis?
What was your average monthly increase in living cost and was/is that amount fairly consistent from month to month? |
Edited by - JimF on 04/18/2003 23:49:39 |
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Catmandale
USA
67 Posts |
Posted - 04/19/2003 : 01:22:27
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Jack,
If I understand you correctly, the carrier was able to determine two separate causes of loss, and they were both covered. They set up two claims.
Have they been able to separate the non-mold damages from each loss? Are they able to separate the mold remediation costs, or does cross contamination and proximity make this difficult?
If they were able to allocate a prorata share of the remediation cost to each claim, why not allocate ALE costs in this manner as well? It appears you have the potential for $28,000 coverage on each claim, even though they run concurrently. If you can split it 50/50 or some other percentage, then you would not be tapped out on the one claim, only halfway through it on each.
Just trying to think outside the box, protect the policyholder and avoid litigation.
It is troubling that they are unable to get a handle on the remediation. My guess is that you are tired of paying a mortgage on a house that sits empty.
Dale Strain
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"When we thought that we had all the answers,
suddenly all the questions changed."
Mario Benedetti (1920); Uruguayan writer.
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Edited by - Catmandale on 04/19/2003 01:26:49 |
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driftwoodjack
12 Posts |
Posted - 04/20/2003 : 11:05:06
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Dale & Jim - You ask, “Just out of curiosity, what costs accounted for such a large INCREASE in monthly cost of living ($3,000)”
My home was 4 bedrooms, 3 baths, with approximately 2400 Sq. Ft. Much of my furniture was cloth based. I have an 11-year old son in school. Because of our allergic reactions, the adjuster told us that we should move out immediately. The first 5 weeks we lived in a 2-bedroom hotel room at Summerfield Suites. The cost was over $1,000 per week and we were reimbursed weekly. To minimize expenses I rented a nearby 3 bedroom, 2 bath fully furnished apartment with bills paid as the adjuster recommended. In addition, we were being reimbursed under ALE for content storage. (I believe this should have been paid under the contents coverage)
Together everything averaged between $2,700-2,900 per month based on electricity usage.
You ask, “Finally, did USAA pay the entire $28,000 ALE up front, or were you required to incur the costs first, and then have USAA reimburse you on a monthly basis?”
We were required to incur the cost first, then we were reimbursed within days of submitting the invoice. This process continued until I retained an attorney to represent my interests. At that point USAA cut a check for around $9,000, which represented the amount left in the $28,000. The $9,000 covered the remaining 3 months that ended in December 2002.
You ask, “If I understand you correctly, the carrier was able to determine two separate causes of loss, and they were both covered. They set up two claims.”
That is correct.
You ask, “Have they been able to separate the non-mold damages from each loss? Are they able to separate the mold remediation costs, or does cross contamination and proximity make this difficult?”
At first an attempt was made to keep damages separated by claim. Since both covered perils filled the crawl space with standing water, and the HVAC return conduits ran under the house, and the supply ducts ran through the attic cross contamination occurred all throughout the house.
I agree with your position on splitting the ALE. There are many things that could have occurred that would have prevented litigation. The adjuster didn’t like my being present during remediation or my asking so many questions. At first he even refused to provide me with a task definition and a level of expertise overview of the experts he was sending into my home to determine the sources of the mold and whether they were covered perils.
Unfortunately, the arrogant manner in which he treated me forced me to approach USAA executive management and have some of his decisions overruled. I think his decisions became personal instead of objective. I realize to the adjuster this is just business. But after seeing our two cats die, how sick my wife and son had become, how sick my sons friends became when they spent the night, and the breathing problems I developed, and the fact my renewed policy did not provide for mold damage, I had to make sure this mess was remediated properly and in accordance with acceptable remediation guidelines.
Unfortunately, the job was a shame, microbial encapsulant paint was sprayed over damp wood and moisture swelled particleboard, the HVAC remediators missed an air duct, the house stinks of a strong chemical smell, and the final clearance test that supposedly passed was so badly skewed every certified expert that has reviewed the results has said they are unreliable. In addition, I hired my own CIH and the in-depth tests he took confirm the remediation job is still incomplete.
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How To Handle The ALE Claim
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