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Cap Ins Agy of Ral Blog

Your place for general insurance information and advice

How much is really covered

Analysis brought to you by the experts at FC&S Online, the recognized authority on insurance coverage interpretation and analysis for the P&C industry. To find out more — or to have YOUR coverage question answered — visit the National Underwriter website, or contact the editors via Twitter: @FCSbulletins.

Question: My clients incurred a fire at their home, which was under contract for sale.  The date of closing was scheduled for March 22, 2018, and the fire occurred on March, 17, 2018.  As a result of the loss, they incurred extensive fire and water damage throughout the majority of the building. The building will not be able to be put up for resale or be occupied for at least 8 months. The insured has already purchased another home in Florida, moved and has an additional mortgage and normal living costs on the home in Florida.  With the home sale now cancelled, the insured is forced to incur additional expenses that will be above their normal standard of living having to pay for the cost of two homes for the next 8 months, or until the home is repaired and sold again.

A claim is being filed for the additional expenses of mortgage, tax, insurance, and utility costs that the insured will now be forced to incur to repair the property as a result of this fire.  The insurance company is covering the repairs to the building but has been hesitant on their interpretation of the policy coverage for loss of use claim.

The following is the language in the policy (form HO-3 06/91) regarding Coverage D — Loss of Use:

“1. Additional Living Expense. If a loss covered under this Section makes the residence premises uninhabitable, we cover any necessary increase in your living expenses incurred by you so that your household can maintain its normal standard of living. Payment shall be for the shortest…”

Are we correct in interpreting that the increase in living expenses being incurred by this insured i.e. the additional mortgage, taxes, insurance, utility costs on the home damaged by the fire should be covered within this policy?

— Kentucky Subscriber

Answer: You need to look at the rest of the language for ALE: Payment is for the shortest time required to repair or replace the damage, or if you permanently relocate, the shortest time for your household to settle elsewhere.

The insured has resettled. While it is unfortunate that the insured cannot now sell the house that had a fire, and has significant additional expenses, the insured has settled into a new home and that is the end of ALE payments.

Related: Can you obtain additional living expense coverage for family pets

Residence under construction destroyed by fire

Question: The insureds was in the final stages of completing construction on a new home, and the insurer knew it was under construction when issuing the policy. They were less than two weeks away from moving in when the house was completely destroyed by fire. They now must find a temporary house until they rebuild the destroyed home.

At the time of the fire, the house was insured under an HO 00 03 10 00 homeowners’ policy. The insurance company has taken the position that even though the insured purchased ALE coverage, the coverage would not apply to this claim. The basis for refusing to pay ALE is that the policy states: “If a loss covered under Section I makes that part of the residence premises where you reside not fit to live in …”

While acknowledging liability for other coverages, the carrier has taken the position that since the insured had not yet moved in, they did not “reside” at the residence premises and are thus not entitled to any ALE coverage. We disagree. The home was insured and named in the policy as the “residence premises,” and the policy defines “residence premises” as “where you reside”. The insurance company charged and received a premium for ALE knowing the house was under construction. The insured is seeking reimbursement for ALE expenses during the restoration period commencing from the time the insured would have been in the house had there been no fire. Please give me your opinion.

— Indiana Subscriber

Answer: You say the insureds were less than two weeks away from moving in: Where were they living at the time of the fire?

ALE is broad coverage but the insured does have to be displaced. Where had they been living while the house was under construction, and could they have continued to stay there?

They were not residing at the new house at the time of the loss, and ALE does not cover future situations. We agree with the carrier, there is no ALE available.

Calculating prorated ALE payments

Question: We are representing a client that had a total loss fire. Her policy has a 12-month time limit for ALE coverage instead of a dollar limit. She is renting a home through the insurance company’s vendor. The 12-month time limit ran out Oct. 23. The insurance company prorated the final ALE payment, leaving a balance owed by the insured for the remaining days in October.

The landlord and lease would not allow for prorated rent for the month of October. Our position is that because the lease did not offer an option for prorated rent and the full month of October was incurred on October 1st, which was still within the 12-month policy time limit, the insurance company owes for the full October rent. What is your position?

— Michigan Subscriber

Answer: Don’t look at it as 12-months; look at it as 365 days. The carrier paid for the ALE for the 365 days from the date of loss which ended on Oct. 23; the carrier is correct in prorating the final payment. The insured owes the difference. If the landlord won’t accept a partial check from the carrier, the carrier can pay the insured and the insured can add the remaining 8 days and pay the landlord directly.

Relocation terminates Additional Living Expenses coverage

Question: A homeowner had a major fire in his million-dollar-plus home in New Hampshire. He lived for eight months in a local rental.

He then accepted a job offer in California, and has been living in rental homes there. He is trying to sell his New Hampshire home, and wants to buy a home in California.

The policy says that ALE stops when he permanently relocates:

“Additional Living Expense. We will pay the reasonable increase in living expenses necessary to maintain your normal standard of living. Our liability will not exceed the smallest of:

  1. Payment for the shortest time to either repair or replace the residence premises. This period of time is not limited by the expiration of this policy;
  2. Payment for the shortest time for your household to settle elsewhere, if you permanently relocate. This period of time is not limited by the expiration of this policy; or
  3. The limit of liability for Loss of Use as specified in the policy Declarations.”

The insurance company states that his move to California constitutes a permanent relocation. I say, since he has been living in rental homes, this is no different than if he moved to another rental home locally. A permanent relocation would be when he moves to a new home that he purchased.  Assume for this case that the ALE period could extend to a portion of his California rental period. We are only claiming six months in California, not the year plus he has been renting.

— Massachusetts Subscriber

Answer: Accepting a job in a different state constitutes a permanent relocation. One doesn’t have to own a home in order to have a permanent residence; many people live in apartments or rented property for years. The insured relocated when he moved to California. There is no ALE for rentals after the move.

Are moving expenses covered?

Question: Our HO-3 insureds suffered a total fire loss. The policy limits for the dwelling and personal property were exhausted.

Since the fire, the insureds have been living in a rented apartment while their home is being rebuilt. During this time, they have been replacing items that were destroyed in the fire. They are now requesting payment for the expense of moving those items out of the apartment back into the rebuilt home.

We would consider this payment to be part of coverage C, but as we said that limit is exhausted. The insureds have hired a public adjuster, who is seeking payment under coverage D, additional living expense.

Are these moving expenses covered as contents or additional living expense?

— New York Subscriber

Answer: The expense for your insureds to move out of their rented apartment back to their home is payable under coverage D, additional living expense. The policy promises to pay any increase in the insureds’ expenses so that they can, “maintain [their] normal standard of living.” This is a very broad promise.

Had it not been for the fire, they would not have been forced to move. Their normal standard of living includes living in (and, in this case, returning to) their home.

Article brought to you by Property&Casualty 360

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Posted 1 week ago
<p>Happy 4th of July - Independence Day from Capital Insurance Agency of Raleigh, LLC<br/></p>

Happy 4th of July - Independence Day from Capital Insurance Agency of Raleigh, LLC

Posted 1 week ago

Staying safe during your independence day celebration

According to Property Casualty 360 every year U.S. fire departments respond to nearly 10,000 home fires involving grills, hibachis or barbecues, according to the National Fire Protection Association. That’s a staggering number — not least because I didn’t know that hibachis still existed. On a serious note, these statistics should not be taken lightly as these fires result in an average of 10 civilian deaths each year, 160 reported injuries, and more than $13 million in direct property damage.

Of the nearly 10,000 fires each year, 4,100 are structure fires and 5,500 are outside property / unclassified damage. Almost all of the $13 million in losses each year are from the structure fires. That’s an average of $31,000 and change per structure damaged — these aren’t little fires.

1. Clean the grill

So how can you avoid becoming one of these grim statistics? As with most risk management, it’s easier than you think. The same NFPA report previously mentioned tells us that 22% of the structure fires were the result of a grill that hadn’t been cleaned. If you are anything like me, taking time to clean the grill before each use seems like a messy and unpleasant chore that seems to yield minimal benefit — after all, the chicken will taste the same whether I tidy up or not, right? But, that 22% number is eye-catching.

Cleaning the grill before lighting it up isn’t about making the chicken (or steaks, ribs or burgers) taste better; it’s about protecting myself, my family and my home. If I have a grill fire that burns my house and injures my family, no one will care how the chicken tasted. Get yourself some disposable gloves, a good wire bristle brush and a scraper and spend 10 minutes cleaning up from last time before lighting up again. Your local fire department would much rather be grilling hot dogs on its own barbeque than rushing to your house to put the fire out.

2. Stay away from flammable material

A startling 17% of grill-based home fires start because the grill was set up too close to flammable material. That’s 1 in 6 fires. Give your grill lots of space, keep it away from walls, low overhangs (11% of these fires start when an outside wall catches fire, the other 6% involve some type of structural element wood framing), fences, dry grass, or anything else that is combustible. Grilling is all about harnessing a small friendly fire and getting it to work for you. Don’t give it a chance to become a hostile fire.

3. Watch the fire

While we’re on the subject — don’t turn your back on a fire. Fire isn’t inherently evil, but it is a powerful, destructive force when left to its own devices. One in 6 backyard grilling fires stem from inattention. Pour a glass of iced tea and pull up a lawn chair — and keep an eye on that fire for the duration. Having a water hose close at hand (connected to a hose bib well away from the grill so that turning the water on doesn’t require you to brave the inferno) is just good risk management also!

4. Know the difference between gas and charcoal grills

This isn’t the time or the place to start the debate about the superiority of one type of grill over another, but we do need to acknowledge that there are differences between gas grills and charcoal grills. For one thing, gas grills have a tank full of additional fuel hooked up to them, while charcoal bags are usually stored a little bit farther away.

The NFPA reports that from 2011–2015, 82% of home fires caused by outdoor grilling involved gas grills. Twelve percent of gas grill fires reported in that interval were the result of a leak or break in the gas line, regulator or tank of gas grills. —Every bit as important as cleaning your grill regularly is proactive maintenance! Inspect your gas lines and valve frequently. The sniff test is handy — commercially available propane gas is infused with a compound called mercaptan, an organosulfur compound found naturally in the blood and brain of humans, which makes the otherwise odorless propane gas smell of rotten eggs. If you smell anything unpleasant near your propane tank, think twice about lighting that match.

A spray bottle of soapy water can help to spot tiny leaks — douse the suspect area with several sprays of soapy water and look for bubbles forming after the spray settles. The soap increases the surface tension of the water, making the bubbles formed by escaping propane gas persist for a few seconds and sometimes even “stack” on each other so that they are easy to spot.

5. Keep children away from the grill

One last area of risk management that I cannot stress enough: Keep small children well away from the grill! The NFPA reports that children under five account for 1,600 or 35% of contact-type burns reported every year. These burns result from accidentally touching (bumping into, falling on or grabbing) the hot grill or hot coals. Please keep your children at a safe distance, and dispose of spent charcoal only after it is thoroughly cold (charcoal can smolder for days under a layer of seemingly cold ashes). In 2015 the Charlotte Observer reported that three house fires in Charlotte, N.C. were the result of smoldering charcoal being dumped into trash cans. Three homes in a single grilling season, in a town of less than a million people — that’s far too many.

Risk management recap

As we head into what looks like another fabulous summer grilling season, please take a few minutes to engage in some basic grilling risk management:

  1. Clean your grill regularly.
  2. Move your grill well away from combustible materials and surfaces before igniting.
  3. Stay close to your grill while it is burning.
  4. If you have a gas grill, inspect the components regularly.
  5. Keep small children out of harm’s way.

With just a little attention to detail, we can all enjoy a summer full of delicious grilled food and keep our homes and families safe at the same time.

We here at Capital Insurance Agency of Raleigh, LLC hope you have a safe holiday.  Free auto insurance and commercial insurance quotes available for you.

Thank you, Michael D. Brown, vice president and property department manager at Golden Bear Insurance Company. He can be reached at michaelbrown93442@gmail.com.  for your great article.

The opinions expressed here are the writer’s own.

Posted 1 week ago

Celebrating Independence Day

I am wishing everyone a happy and safe Independence Day Holiday.  Please be safe in your travel, and responsible with your fun.

Posted 3 weeks ago
<p>Celebrate Independence Day <br/></p>

Celebrate Independence Day 

Posted 3 weeks ago

Help me understand my car insurance policy

We are asked this question all of the time, “Help me understand my car insurance policy” at Capital Insurance Agency of Raleigh, LLC.  A quick reference of insurance terms. Let’s start with the state minimum requirements which are $30/$60/$25.  This means the following: The Insurance Company will pay the following:

$30,000 per person in an accident for bodily injury
$60,000 per accident for bodily injury
$25,000 for property damage per accident.
Regarding the deductibles for collision and other than collision aka comprehensive coverage many people question how much deductible should I have?  This is going to depend on your personal budget, and how much you can afford. Our deductibles range from as low as $50.00 per claim to $ 1,000.00 per claim. Just know the lower the deductible the higher your monthly rate will be.  Industry standard is $500.00 deductible. If your car is being financed your lien holder is most likely request either $250.00 or $500.00 deductible.

Rental car coverage on your car insurance policy is coverage for you to have access to another car to drive while your vehicle is being repaired. The insured has a choice to choose from $15.00 per day rental car coverage up to $45 per day rental car coverage. Usually $30 per day is the average coverage and it usually cost an average of $15 per 6 months on an average car insurance policy.

Roadside assistance is also included on some car insurance policy.  This helps our the insured if the car breaks down. This type of coverage provides towing to the nearest gas station or another location the insured chooses, unlocking cars in the event of a lockout, changing a tire, and much more. This type is coverage is usually around $2.00 or less per month on average.

Medical payments is for you the insured. The BI - bodily injury is for those who are injured in an accident you are at fault. Medical payments range from $1,000.00 per accident to $5,000.00 per accident. This money can be used to pay for your ambulance ride to the hospital after an accident, your physical therapy appointments, and follow-up appointments with your primary care physician.

Call us today for a free quote. Let us see if we can save you some money on your car insurance today.

Posted 9 weeks ago
 
 
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