Homeowner’s Insurance: Additional Living Expenses – The Insurer’s Ounce of Prevention
Alford, Helen Johnson
I.
INTRODUCTION
Additional Living Expenses are usually an insured’s primary concern following a property loss and are generally the first dollars paid under the homeowner’s policy. The standard Homeowner’s Insurance Policy provides for Additional Living Expenses (“ALE”), under Coverage D – Loss of Use.1 Because ALE benefits cover the insured’s immediate and critical needs for food and shelter following a substantial or total loss, the manner in which the insurer handles the ALE claim sets the stage for resolution of all claims filed in connection with the loss.2 Prompt and efficient dispatch of an ALE claim benefits both parties and can be achieved only through the establishment of a good rapport between the insured and insurer. Communication is vital to establishing this rapport. The insurer should make certain that the insured fully understands both his benefits and his obligations under the ALE provision of his policy. By taking time to explain the ALE benefits, the insurer reassures the insured that it is there in his time of need. By clarifying the insured’s responsibilities under the provision, the insurer deflects potential disputes when it asks the insured to verify requested ALE benefits. The provision of necessary and appreciated assistance to the insured minimizes and controls ALE costs because an insured is less likely to inflate the ALE claim, believing the insurer is sympathetic to his needs and is aware of its responsibilities to him under the policy. Once the insured’s immediate needs are met, both parties can turn their attention to resolving the remaining claim issues. The establishment of a good relationship with the insured at the ALE payment stage, facilitates the entire claims adjustment process and offsets the chance that the insured will become disgruntled with subsequent and, often, unavoidable delays in the claim process and file an action against the insurer for refusal or delay of payment.
II.
ALE COVERAGE DEFINED
The standard homeowner’s policy provides coverage for Additional Living Expenses under Coverage D – Loss of Use.3 Standard policy language provides for “additional living expenses” or “fair rental value” if a loss covered by the policy makes the insured’s residence uninhabitable.4 An “additional living expense” is any necessary increase in living expenses incurred by the insured so that his household can maintain its normal standard of living.5 “Fair Rental Value” (“FRV”) is the fair rental value of that part of the residence in which the insured resides, less any usual expenses that do not continue while the premises are uninhabitable.6 If, prior to the loss, the insured rented a portion of the residence to others or had reserved a portion for rental to others and that portion is rendered untenable by a covered loss, then Coverage D pays the fair rental value of that portion of the premises. Payment for ALE or FRV is made for the shortest time required to repair or replace the premises, or, if the insured chooses to relocate, the shortest time required for the insured’s household to settle elsewhere.7 If a civil authority prohibits the insured from using the insured premises as a result of direct damage to a neighboring premises by a Peril Insured Against in the policy, (e.g., a mandatory evacuation due to natural disaster), additional living expenses and fair rental value benefits are provided for no more than two weeks.8
III.
DETERMINATION OF ALE BENEFITS DUE THE INSURED
The purpose of ALE coverage is to protect against additional expenses that the insured incurs in the course of maintaining his household following a significant or total loss to his insured residence.9 In order to be reimbursed under the ALE coverage, the insured must take reasonable steps that will allow him and his family to return to their “normal standard of living.”10 Such steps include locating substitute housing that is priced and located so as to afford the insured’s household to return to its normal routine. The claims professional should work with the insured to accomplish this. Assisting in this process will reduce the chance that the insured will secure shelter and amenities, (i.e., additional living expenses), that unreasonably exceed his normal standard of living. Without assistance, an insured could incur living expenses that are not covered under his policy, thus increasing the cost of processing the claim for the insurer and frustrating the insured.
What constitutes a “reasonable” ALE will be specific to each individual insured and to determine what qualifies as a “reasonable” ALE, the insurer must determine the insured’s standard of living prior to the loss. To accomplish the best settlement of the ALE claim for both parties, the insurer should meet with the insured immediately after a loss that renders the covered residence untenable to determine the household’s normal activities and lifestyle prior to the loss. That will affect the amount of the ALE benefits owed and, therefore, reimbursable, under the policy. Depending on the circumstances, some normal living expenses will continue during the ALE benefit payment period, while others will diminish or even stop. The claims professional should take care to determine if an insured has special needs requiring consideration when evaluating housing options. Working closely with the insured to formulate a plan for temporary housing not only assures the claimant that he is getting his premium’s worth, but avoids frustration of the entire claims process by solidifying the relationship between the parties.
A. The First Meeting
The claims professional should schedule a meeting with the insured as soon as possible after receiving notice of the loss.11 Prior to meeting with the insured, the claims professional should complete the following tasks:
1. Verify that the loss is covered by a policy in force on the date of the loss and that the claimant is an insured under the policy in force;12
2. Verify that the damaged property is the policyholder’s principal place of residence;13
3. Verify that the damaged property is uninhabitable and determine how long it will remain uninhabitable as that period may be less than the total repair time; and,
4. Explore options available for relocation such as a hotel, furnished apartment, mobile home, rental home, or relatives and be prepared to discuss those options with the insured.
The initial meeting with the insured will set the tone for resolving the remaining claim issues. The insurer’s goals are not only to gain necessary information for ALE benefits, but to assure the claimant that the insurance company cares about his needs, thereby deflecting future disputes over ALE and other claims benefits paid under the policy. In order to maintain control of the interview, the claims professional should schedule the meeting location away from the distraction of the damaged residence. During the initial meeting, the claims professional should try to get an initial sense of the insured’s expectations, that is, what does the insured expect the insurance company to do for him? The claims professional can then confirm which of the insured’s expectations are covered under the policy and explain why others may not be covered. At this point, the claims professional should explain the ALE claim process to the insured, making certain he understands which expenses will be covered and the manner in which he is to submit his claim in order to receive reimbursement.14 The claims professional should also discuss the difference between ALE and FRV with the insured and be prepared to answer questions regarding the coverage available under both options, including the accounting required to receive probable payment under both options. Some insureds may prefer FRV because it allows them to stay with relatives or in a second home that affords greater comfort than temporary accommodations. In addition, there are usually fewer accounting burdens to the insured with FRV than there are with ALE.15
Obtaining copies of the insured’s regular monthly bills from utility companies, banks or credit card companies will assist the insurer in verifying the insured’s description of his normal standard of living and detecting certain things that might become points of contention if not addressed at the initial level. For example, there may be items or activities that are especially important to the insured that are relatively insignificant in the total claims process and are not “common” to most insureds. Identification of an insured’s individual expectations and needs at the outset of the claim process may avoid future disputes. An insured suffering the loss of his home and personal possessions who perceives that the insurer has his best interests in mind may be more willing to consider settlement options and less likely to intentionally inflate his ALE claims. This reduces the cost of claims handling and makes the entire claims process operate more smoothly.
B. Determining Coverage For ALE
According to standard policy language, an additional living expense is reimbursable if it is a necessary expense incurred so that the insured’s household can maintain its normal standard of living.16 Most courts have determined the standard additional living expense provisions to be unambiguous and, therefore, enforceable.17
As an initial matter, the insured must establish that he actually incurred the expense. The standard homeowner’s policy requires that the insured present documentation supporting additional living expenses incurred in order to receive reimbursement. Courts have found that requirement to be a reasonable and enforceable provision of a homeowner’s insurance contract.18 In Hilley v. Allstate Insurance Co.,19 the insureds’ failure to provide the insurance company with receipts proving additional living expenses negated their bad faith claim against an insurer for failure to pay those additional living expenses. The insureds filed an action against their insurer for, inter alia, breach of contract and bad faith refusal to pay additional living expenses.20 Following the complete destruction of their home in a fire, the plaintiffs resided with a relative for one month, in an apartment for four to five months, and then purchased a trailer which they parked on the lot where their damaged residence stood.21 During this period, the insurance agent paid the plaintiffs $570 for additional living expenses, $1,000 for humanitarian needs, and $1,050 for clean-up and debris removal.22 The plaintiffs subsequently submitted an itemized list of additional living expenses together with a statement that they had only received $570 from Allstate for their living expenses and demanded additional reimbursement in the amount of $1,384.50.23 The Alabama Supreme Court found that the plain language of the policy required the plaintiffs to submit receipts for their additional living expenses in order to receive reimbursment, but that the only receipts the plaintiffs provided the insurer were those for the $570, which the insured had previously reimbursed.24 In addition, the plaintiff testified that the insurer had told him to save all of his receipts for ALE and submit them for reimbursement.25 The Alabama Supreme Court affirmed the trial court’s summary judgment on the breach of contract claim in favor of Allstate because the terms of the policy unambiguously required them to provide receipts as proof of living expenses incurred in order to obtain reimbursement, which the insureds failed to do.26
Some additional living expenses, by their nature, cannot be proven with documentation in the form of paper receipts. In Boyd v. Hartford Insurance Co. ,21 the plaintiff insureds sued Hartford, claiming, inter alia, breach of contract of insurance and breach of the obligation of good faith and fair dealing in connection with their claims filed for benefits when vandals destroyed their home under construction. At trial, the jury awarded $23,630 in damages for additional living expenses under the homeowner’s insurance policy and $50,000 on the remaining claim.28 Hartford appealed from the trial court’s denial of their motions for new trial and to set aside the verdict on grounds that the plaintiffs presented no evidence that could logically and legally support the verdict for the additional living expenses provisions of the policy.29 The court disagreed, noting that the evidence, in the form of witness testimony, showed that the plaintiffs, through their insurance agent, had been in constant contact with the adjuster concerning payment for the cost of maintaining two homes.30 According to testimony, the plaintiffs were residing in one home, which they originally intended to sell prior to the vandalism, while the vandalized home was under repair construction.31 The plaintiffs introduced documentary evidence of the cost of maintaining their existing home, which was encumbered by three mortgages, and the mortgage cost of the home under construction.32 The plaintiffs also introduced witness testimony regarding the date on which they would have been able to relocate to their new home, but for the vandalism, as well as the testimony of the various contractors working on the new home as to the estimated cost of reconstruction.33 Based upon that evidence, the court concluded that the jury could have reasonably concluded the breach of contract for payment of additional living expenses to be $23,600.34 Because of Hartford’s denial of those reasonable living expenses, in the face of the plaintiffs’ and their agent’s representations that the plaintiffs were in dire need of those funds, the court upheld the jury’s $50,000 award for breach of obligation of good faith as well.35
Once the insured submits proof of an additional living expense, the claims representative is charged with determining whether it is necessary to maintain the insured’s and his household’s normal standard of living. The primary objective of property insurance is to indemnify the insured, that is, to put the insured back in the position he occupied prior to the loss.36 The claims representative should carefully interview the insured to make certain that the reimbursement of the claimed additional living expense is not only for something that was a part of the daily life and operation of his household, but also that the expense is reasonable. Property insurance is not intended to benefit the insured because of a loss no matter how substantial,37 but the insurer should make every effort to be reasonable in its denial of an additional living expense and should explain the reason for denial.38 Because the adjustment of the ALE claim sets the tone for the remainder of the claim process, the claims professional should exercise discretion in the comments he makes when assessing an ALE claim. In Boyd v. Hartford Insurance Co.,39 the plaintiffs presented evidence in the form of their insurance agent’s testimony that the adjuster on their claim made statements to the effect that an insurance company would never pay more than an insured was willing to accept.40 The court found that these statements, made in the face of evidence that the plaintiffs were obviously in dire need of funds in the form of additional living expenses, constituted substantial evidence of Hartford’s failure to engage in fair settlement practices.41 While the adjuster cannot be faulted for not wanting to pay the plaintiffs more than they were due under the policy, a bit of restraint in commentary and an explanation for the denial of benefits might have diminished the evidence supporting the plaintiffs’ bad faith claim regarding the insurer’s denial of their ALE claim.42
InPolselli v. Nationwide Mutual Fire Insurance Co.,43 the plaintiff, Regina Polselli, filed an action for breach of contract and bad faith in response to the insurance company’s denial of her claims for additional living expenses filed following the destruction of her home by fire. At the time of the loss, Regina and her daughter were the sole occupants of the home and were forced to vacate the premises permanently.44 When the loss occurred, Regina and her estranged husband, Rudolph, were involved in an acrimonious divorce proceeding; Rudolph had already moved to another state.45 He was the only individual named on the title of ownership to the property and the only named insured on the applicable contract of property insurance.46 Following the fire, Regina Polselli retained a public adjuster and an attorney and filed a proof of loss for the building loss, the loss of the contents, and the cost of additional living expenses.47 Initially, Nationwide refused to deal with anyone other than Rudolph Polselli and stated it would not recognize any claim filed by Regina Polselli.48
Because she had no funds with which to make other living arrangements, Regina Polselli was forced to move from place to place, carrying her remaining possessions in a garbage bag, and depending on the generosity of friends who did not demand advance payment. Despite repeated requests for money that would allow Regina Polselli to move herself and her daughter into comparable housing, together with reliable information that Regina Polselli was without any money to afford housing on her own, Nationwide refused to advance any money for additional living expenses in spite of its policy of making immediate advances on claims.49 Regina Polselli filed suit on March 4, 1991 for breach of contract and bad faith. Following a bench trial, the court concluded that Nationwide acted in bad faith toward Regina Polselli with regard to her contents claim and ALE claim and awarded $90,000 in punitive damages.50
The court determined it was undisputed that the insurance policy required Nationwide to make advance ALE payments to Mrs. Polselli and that its failure to do so was unreasonable under the circumstances and constituted a breach of its duty of good faith toward her.51 It found that Nationwide’s refusal to advance ALE payments to Mrs. Polselli before it was able to establish coverage for the January 1, 1991 fire was justifiable, but that its refusal to advance Mrs. Polselli any ALE funds for some four months after it made that determination was unreasonable, especially when Nationwide had been repeatedly informed of Mrs. Polselli’s destitute circumstances.52 The court found those facts constituted clear and convincing evidence that Nationwide acted in bad faith and failed to give Mrs. Polselli’s interests the same consideration it gave its own.53
An insurer’s efforts to reasonably and timely settle an ALE claim are effective evidence to refute a bad faith claim. In Dodge v. United Services Automobile Ass Vi,54 the plaintiff, Thomas W. Dodge, brought suit on a fire insurance policy against United Services Automobile Association seeking statutory penalties, attorney’s fees, and damages, including additional living expenses, resulting from the insurer’s late payment of his claim for fire loss. After filing his claim, Dodge entered into a settlement agreement with United Services in which his additional living expenses incurred from the date of the fire through the date of the settlement were paid, including reimbursement for mortgage interest.55 According to the evidence presented at trial, the insurer, through its claims professional, timely processed the claim and made the settlement offer in a timely fashion.56 Subsequent to executing the settlement agreement, the plaintiff filed his lawsuit, claiming additional living expenses from the date he executed the settlement agreement through the date the court entered judgment on his claim. On appeal, the reviewing court upheld denial of the plaintiff’s claims for additional living expenses, finding that the expenses were not necessary, given that the plaintiff incurred them as a result of his own breach of a reasonably negotiated settlement agreement, one of the primary purposes of which was to avoid the incurrence of additional living expenses.57
What qualifies as reimbursable ALE depends upon the circumstances of the claim and the insureds involved. An additional living expense is reasonable and necessary if it maintains the insured household’s normal standard of living prior to a covered loss, even if that standard of living is high. In Commonwealth Lloyd s Insurance Co. v. Thomas,58 the insurer sought review of a judgment entered upon a jury verdict in favor of the insured homeowners in an action on a fire insurance policy. Among other things, the insurer argued that there was no evidence to support the jury’s award of $27,000 for additional living expenses.59 The plaintiff’s home and all of its contents and furnishings were completely destroyed by the fire, leaving them with no home and no furniture.60 The insurer attacked each item of increased living expense offered by plaintiffs, in particular $3000 per month for a twomonth stay at a hotel and $2,000 per month interest on the mortgage on a home built by the plaintiffs for resale in which they lived for six months.61 The court acknowledged that the expenses might seem high to some, but that in this particular case, where it was undisputed that the plaintiffs’ standard of living was high before the covered loss, they were necessary and reasonable.62 Accordingly, the court upheld the jury’s award for living expenses.63
III.
CONCLUSION
There is no guaranteed method for settling a homeowner’s insurance claim that insulates the insurer from coverage disputes, but the reported decisions cited in this article indicate that an effort on the part of the insurer to assist the insureds with their immediate needs following a property loss can diminish the possibility of such disputes. While reported decisions involving claims for ALE benefits are currently sparse in comparison to decisions generated with regard to general bad faith and breach of insurance contract claims, the insurer’s initial response to a property loss claim is frequently a factor in actions filed against insurers. A prompt and sincere response to an insured’s critical needs for food and shelter following a property loss, will establish a good relationship with the insured, which will decrease the risk of a contentious dispute later in the claims process and which may very well prevent litigation resulting in a substantial damages award against the insurer.
[dagger] Submitted by the authors on behalf of the FDCC Alternative Dispute Resolution section.1 A complete copy of Homeowners 3 ISO 2001 Coverage D – Loss of Use Form is attached hereto as Appendix A.
2 One of the top consumer complaints regarding property insurance companies’ responses to claims is for delays and denials of additional living expenses. See, e.g., Kenneth Reich, Insurance Firms Get Good Grade on Fire Response, L. A. TIMES, Feb. 13, 2004, at B6.
3 See Appendix A.
4 Id.
5 Id.
6 FRV = (Average short-term rental for similar residence + rental for similar furnishings – discontinued expenses at insured property) x (months required for repair).
1 See Appendix A.
8 See Appendix A. For an example of alteration of terms of contract as a gesture of good faith, see Odom v. Armed Forces Ins., No. 1:05cv69-LTS-RHW, 2006 U.S. Dist. LEXIS 62498, (S.D. Miss., Aug. 31,2006) (Defendant insurance company adopted a corporate policy to reimburse its insureds for ALE incurred as a result of mandatory evacuation order by civil authority for thirty days rather than its policy provision of two weeks.). Id.
9 See Thompson v. Shelter Mut. Ins., 875 F.2d 1460, 1462 (10th Cir. 1989) (function of additional living expenses is to enable the insured to maintain, insofar as possible, the pre-loss standard of living during the repair and replacement period.)
10 See Appendix A.
11 See Thompson, 875 F. 2d at 1462 (affirming jury award for additional living expenses based on the insurer’s course of conduct during claims process) (citing Christian v. Am. Home Assurance Co., 577 P.2d 899, 903 (Okla. 1978) (“unwarranted delay precipitates the precise economic hardship the insured sought to avoid by purchase of the policy”).
12 See Highlands Ins. Co. v. Kravecas, 719 So. 2d 320 (Fla. Dist. Ct. App. 1998) (reversing judgment awarding plaintiff additional living expenses reversed because “loss of use” coverage in defendant insurer’s policy was to make whole a displaced homeowner, and plaintiff purchased covered hurricane damaged property after the fact).
13 See Wallace v. Auto-Owners Ins. Co., 421 So.2d 131 (Ala. Civ. App. 1982). Here the undisputed evidence showed that plaintiff resided in substitute housing for eighteen months and had not started repairs to his covered property, plaintiff not due additional living expenses as the covered property no longer constituted his permanent residence.
14 For example, most ALE provisions require the insured to submit proof of expenses incurred. See, e.g., Boyd v. Hartford Ins. Co., No. X04CV91C103460S, 2005 Conn. Super. LEXIS 254 (Jan. 28, 2005) (requiring insured to affirmatively demonstrate that she incurred an actual increase in additional living expenses in order to recover for them under a homeowner’s policy of insurance).
15 However, an insured is not entitled to recover both ALE and FRV benefits. See Allen v. Safeco Ins. Co., 782 F. 2d 1517 (11th Cir. 1986) (holding that insured not entitled to ALE where evidence supported FRV loss).
16 See Appendix A.
17 See, e.g., Phoenix Assurance Co. of New York v. Singer, 221 F. Supp. 890 (E.D. Mo. 1963), aff’d, 331 F.2d 10 (8th Cir. 1964); Dodge v. United Services Auto. Ass’n, 417 A.2d 969 (Me. 1980); Wallace v. Auto-Owners Ins. Co., 421 So. 2d 131 (Ala. Civ. App. 1982); Carlyon v. Aetna Cas. & Sur. Co., 413 So. 2d 1355 (La. Ct. App. 1982).
18 See United States Fid. & Guar. Co. v. Romay, 744 So. 2d. 467 (Fla. Dist. Ct. App. 1999) (insured’s obligations, including those for proof of additional living expenses, are not unduly burdensome or arbitrary, but constitute assurance that the insurer will be provided adequate information on which to base its conclusion regarding payment under the policy and are required of insured as conditions precedent for appraisal of loss). See also Allen, 782 F.2d at 1519-20 (defendant insurer’s motion for directed verdict should have been granted where plaintiffs failed to submit required statement for loss of use and receipts for additional living expenses incurred), vacated in part on other grounds, 793 F.2d 1195; Jones v. Aetna Cas. & Sur. Co., Inc., App. No. 87-280-11, 1988 Tenn. App. LEXIS 198 (Tenn. Ct. App. Mar. 2, 1988) (remanding case and suggesting remittitur where plaintiff presented no satisfactory evidence of unpaid additional living expenses and where evidence showed that insurer made other interim payments to plaintiffs); Bourrie v. United States Fid. & Guar. Ins. Co., 707 P.2d 60, (Ore. Ct. App. 1985) (affirming directed verdict for defendant insurance company against plaintiff insurer seeking additional living expenses where plaintiff had not complied with policy provision requiring him to submit receipts for additional living expenses with certain time of loss). See also Boyd, 2005 Conn. Super. LEXIS 254 at *8 (citing Georgia Farm Bureau Mut. Ins. Co. v. Smith, 346 S.E. 2d 848, 851 (Ga. Ct. App. 1986) (holding that evidence of estimated cost of reimbursement of additional living expense does not constitute actual proof of loss); Young v. State Farm Fire & Cas. Ins. Co., 426 So. 2d 636 (La. 1982) (asserting where plaintiff only spent five days each month in covered residence, he was not due additional living expenses for residing in another owned property following loss).
19 562 So. 2d 184 (Ala. 1990).
20 In addition to additional living expenses, plaintiffs also sought recovery of additional monies due under their policy to a contractor that agreed to rebuild their home under theories of breach of contract, outrageous conduct, bad faith refusal to pay, fraud, violation of public policy and violation of Ala. Code § 27-12-25 (1975). Hilley, 562 So. 2d at 186. The court found that the insurer, through its agent, acted in bad faith in negotiating the provision of rental coverage, but stated that because it had affirmed the summary judgment with regarding to breach of contract, it must also uphold the summary judgment as to the claim for bad faith refusal to pay additional living expenses. Id. a 192. The court offered no explanation of this decision.
21 Id.
22 Id.
23 Id.
24 Id.
25 Id.
26 Id. at 191-92. See also Aetna Cas. & Sur. Co. v. Corriveau, No. CV-910702063, 1991 Conn. Super. LEXIS 2138 (Conn. Super. Ct., Sept. 19, 1991) (confirming arbitrators’ award denying recovery of additional living expenses where claimants presented insufficient information to determine amount of award). See Commonwealth Lloyd’s Ins. Co. v. Thomas, 678 S.W.2d 278 (Tex. Civ. App. 1984), for an example of an unreasonable requirement of proof of ALE (rejecting argument that the insureds had to produce proof of their living expenses prior to the covered loss in addition to proof of living expenses after the loss in order to recover under ALE provision).
27 No. X04CV91C103460S, 2005 Conn. Super. LEXIS 254 (Conn. Super. Ct., Jan. 28, 2005).
28 Id.
29 Id. Defendant Hartford also claimed that plaintiffs failed to establish injury of rights to receive benefits due under the contract of insurance and that, in doing so, Hartford acted with ill will, malice, deceit or dishonesty. Hartford further argued that the action was time-barred by the suit limitation clause in the contract of insurance or that, in the alternative, the jury should have been allowed to consider Hartford’s special defense, alleging the suit limitation provision. Id.
30 Id.
31 Id.
32 Id.
33 Id.
34 Id.
35 Id. But see Morris v. Nationwide Mut. Fire Ins. Co., 728 S.W.2d 335 (Tenn. Civ. App. 1986) (holding that advance payments for additional living expenses without enforcement of the documentation requirement constitutes waiver of the insurer’s reliance on that provision). See also Baird v. Fidelity-Phenix Fire Ins. Co., 162 S.W.2d 384, (Tenn. 1942) (estopping insurer from denying coverage where insurer is aware insured’s claim did not meet requirements of policy).
36 Johnny Parker, Replacement Cost Coverage: A Legal Primer, 34 WAKE FOREST L. REV. 295, 296 ( 1999) (citing Travelers Indem. Co. v. Armstrong, 442 N. E.2d 349 (Ind. 1982)).
37 Id. (citing JOHN ALAN APPLEMAN & JEAN APPLEMAN, INSURANCE LAW AND PRACTICE 3823 (1972)).
38 see Boyd, 2005 Conn. Super. LEXIS 254, at * 16 (finding that failure of insurer to provide satisfactory explanation of denial of additional living expenses contributed to finding of bad faith). see also Bowen v. Prudential Prop. & Cas. Ins. Co., No. 94CA25, 1995 Ohio App. LEXIS 3947, (Ohio Ct. App. Sept. 7, 1995) (upholding judgment finding insurer not liable for additional living expenses where insurer timely notified insured of denial of claim and reason for denial); London v. Trinity Cos., 877 P.2d 620 (OkIa. Civ. App. 1994) (concluding that denial of additional living expenses was reasonable and justifiable where insured failed to document additional living expenses and policy provisions clearly stated the requirement and insurer verbally explained that requirement in detail to the insured).
39 No. X04CV91C103460S, 2005 Conn. Super. LEXIS 254 (Conn. Super. Ct. Jan. 28, 2005).
40 Id.
41 Id.
42 Consider Fisher v. Certain Interested Underwriters at Lloyds, 930 So. 2d 756 (Fla. Dist. Ct. App. 2006), in which the reviewing court denied the trial court’s judgment finding that plaintiff’s claim was not covered, but affirmed its judgment requiring insured to repay insurer for monies conditionally advanced for ALE prior to determination of coverage. In doing so, the reviewing court noted that the defendant, by its own admission, advanced the monies solely to avoid any claim by the plaintiffs for bad faith. Id. (citing Three Palms Pointe, Inc. v. State Farm Fire & Cas. Co., 250 F. Supp. 2d 1357 (M.D. Fla. 2003), aff’d, 362 F.3d 1317 (11th Cir. 2004)).
43 No.91-1365, 1995U.S.Dist. LEXIS 10173, (E.D. Pa. July 20, 1995), cost andfees proceeding at, PoIselli v. Nationwide Mut. Fire Ins. Co., 1995 U.S. Dist. LEXIS 17006, (E. D. Pa., Nov. 14, 1995) (granting insured’s request for attorney’s fees associated with litigation of bad faith claim where insurer found to have acted in bad faith), rev ‘d in part and remanded by Polselli v. Nationwide Mut. Fire Ins. Co., 126 F. 3d 524 (3d Cir. Pa. 1997) (reversing judgment to extent it denied recovery of plaintiff insured’s attorney fees for litigation of bad faith claim against insurer and remandiing with instructions for calculating fees, should trial court award them; affirming award of plaintiff’s attorney fees for prosecution of unerlying claim on policy), on remandat, Polselli v. Nationwide Mut. Fire Ins. Co., 1998 U.S. Dist. LEXIS 19396, (E.D. Pa. Dec. 11, 1998) (finding trial court’s award of attorney’s fees to plaintiff for litigation of bad faith claim proper based on egregious conduct of defendant; awarding attorney fees of $107,130.00 to plaintiff in addition to $90,000.00 for punitive damages)).
44 Polselli, 1995 U.S. Dist. LEXIS 10173.
45 Id.
46 Id.
47 Id.
48 Id.
49 Id.
50 Id.
51 Id.
52 Id.
53 Id.
54 417 A.2d 969, (Me. 1980).
55 Id.
56 Id.
57 Id.
58 678 S.W.2d 278 (Tex. Ct. App. 1984), judgment against defendants aff’d., rev’d and remanded for recalculation of prejudgment interest award to plaintiffs, 825 S.W.2d 135 (Tex. App. Ct. 1992).
59 678 S.W.2d at 287.
60 Id.
61 Id.
62 Id.
63 Id.
Helen Johnson Alford is a partner with the law firm of Alford, Clausen & McDonald, LLC. She obtained her law degree from Tulane University in 1982. She is a member of the Alabama Bar, Mississippi Bar, Tennessee Bar and Texas Bar. She is Secretary/Treasurer of the Alabama Defense Lawyers Association and a member of the Mississippi Defense Lawyers Association, DRI, and Federation of Defense & Corporate Counsel.
Gaby Reeves Pringle is an associate with the law firm of Alford, Clausen & McDonald, LLC. She received her law degree from Tulane University in 1999. She is a member of the Alabama Bar and the Mobile Bar Association. She is President of the Paul W. Brock Chapter of the Inns of Court, a member of the Alabama Defense Lawyers Association and DRI.
Copyright Federation of Defense & Corporate Counsel, Inc. Spring 2007
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