Your insurance company, its employees and independent adjusters, are required to follow California laws, regulations, and Department of Insurance directives when handling your property damage claim. Some of these are triggered by whether or not a Presidential or Governor-declared State of Emergency has been declared. Insurance claim adjusters, especially those who come from out of state after a disaster, don’t always know or follow applicable laws and regulations, so it’s often up to you to understand and enforce them for yourself.

Claim Handling Practices in the Event of a Government-Declared Disaster

The following is a set of rules that outlines how insurance companies MUST act after a declared State of Emergency in California. Re-stating these rules in your communications with insurance company employees gives you leverage to get them to pay your claim fairly, promptly and fully.

Loss of Use/Additional/Temporary Living Expenses (ALE) – If you have suffered a total loss relating to a declared state of emergency, your insurance company must give you a cash advance of no less than four months of your ALE benefits while working with you on calculating your full losses and benefits owed. This advance should help you get situated after the shock of the loss. After that required advance, most insurers will require you to submit receipts and document your ALE expenses in order to collect the rest of your benefits earmarked for temporary living costs. ([CA Ins. Code 2061 (a)(1)]. If you ask your insurer to give you a list of items normally classified as reimbursable ALE expenses, they are legally required to provide that list to you [Cal Ins Code 2060].

Restricted Access by Civil Authority (ALE) – In the event of a state of emergency related to a covered peril that, by an order of civil authority, restricts access to the insured property ALE coverage shall be provided for at least two weeks. Additional extensions shall be provided for good cause but are subject to other policy provisions. ([CA Ins. Code 2060(c)]

Debris Removal – Insurance companies should agree to cooperate and make your debris removal benefits available if you decide to participate in a program through which your and your neighbor’s debris gets removed through a coordinated effort.

Buying or Rebuilding – In the event of a total loss (disaster or non-disaster) CA law [Cal Ins. Code 2051.5 (c)] allows you to use your full replacement benefits, including any building code upgrade costs and extended replacement cost coverage you may have, to:
– rebuild your home at the current location,
– rebuild at a new location, or
– purchase an already built home at a new location.

Land Value Deduction – In the event of a total loss to your property, the amount owed to you by the insurer is the cost to rebuild your home at its original location, including building code upgrade coverage and extended replacement cost coverage. Your insurer is not allowed to take a deduction for the value of land under the replacement home you purchase. [Cal Ins. Code 2051.5 (c)(2)]

Combining Coverages – If your home is destroyed due to a declared emergency