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By Andi Bourne
Pathfinder 

Mandatory Evacuations Can Trigger Insurance Benefits

 

September 7, 2017

Nathan Bourne, Pathfinder

Montana National Guard arrived in Seeley Lake Tuesday. They are staffing the check points on the closed roads due to the evacuation order issued Monday night, Aug. 28 . They know who is in and out of the area at all times and help keep the areas secure.

SEELEY LAKE – Have you been evacuated during the Rice Ridge Fire? Owner of Summit Insurance Agent Tom Monaghan said most homeowner policies have coverage that will pay additional living expenses in the event of a mandatory evacuation.

The coverage that lends financial assistance to clients in causes such as the Rice Ridge Fire is called Additional Living Expense (ALE). Some companies may brand it with different names but in the industry it's referred to as Coverage D. If anyone affected calls their agent and asks about Coverage D, the agent will know what they are referring to.

ALE is a coverage that is usually reserved for providing additional funds after a claim from a covered peril due to 'direct physical loss.' However, most carriers have a provision in the ALE language that provides for 'civil authority.' This provision usually reads: "If a civil authority prohibits you from use of the residence premises as a result of direct damage to neighboring premises by a cause of loss we cover in this policy, we cover the Additional Living Expense as provided for no more than two weeks during which use is prohibited." 

Rocky Mountain Adventure Gear - For all Your Motorized and Non-Motorized Adventures!

In a practical sense this means if a resident is forced to evacuate by a Mandatory Evacuation Order, the order should trigger the ALE coverage and the carrier should step in and provide coverage under the policy. Since forest fire is a covered peril on almost every homeowner policy out there, this satisfies the 'a cause of loss we cover' portion. A Pre-Evacuation Notice, or Evacuation Warning, does not trigger ALE. 

This coverage is designed to cover the additional living expense incurred by a mandatory evacuation. The key here is that it covers the 'additional' living expense.

If a client is displaced and has to stay at a hotel, and thus incurs this additional expense, the cost of the hotel should be covered.

If a client has to relocate and incurs additional fuel costs, this should be covered.

Where ALE becomes tenuous is in the food category. If a family of five has a monthly grocery budget of $600, the additional cost to feed said family (in the event of a mandatory evacuation triggering ALE) would be payable under this coverage. However, this may not be the entire bill.

Monaghan explained that if the family spends $600 a month, by simply math they spend an average of $20 per day on food. If that family has to eat out due to ALE coverage being triggered, and the daily bill comes to $125, the carrier would typically only pay $105. ($125 total bill – typical daily spending of $20 = $105 paid).

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All receipts should be kept so when the claim is filed there is a record of the expenses.

With ALE coverage, clients will want to make sure of a potential deductible prior to filing any claim. Monaghan said while most companies out there provide this coverage at a $0 deductible, there are carriers that do subject the claim to the standard all peril deductible noted on the policy.

It is also possible to have a homeowner policy without this Civil Authority clause. They do exist in the market, so if possible the client needs to read the policy or simply call their agent.

Finally, if a renter is displaced for the same reasons discussed above, ALE does exist there as well. That said, only about half of the renter insurance policies on the market have the Civil Authority clause, so these clients need to contact their agent when affected by a mandatory evacuation.

ALE works different with commercial policies, so hopefully the affected parties choose to fill up Seeley lodging first and eat locally when possible.

"Those businesses need all the help they can get as well," said Monaghan.

Monaghan can be contacted via email tom@summitinsurancemt.com or by calling 406-677-7400.

 

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