Additional Living Expense

Insurance lawyers in the Dallas – Fort Worth area need to be able to discuss coverage for “additional living expense” ALE with clients.
In 2005, the United States District Court for the Southern District of Texas issued an opinion in the case styled, Howard v. State Farm Lloyds. Here is some of what the case says.
The insured, Howard, filed a mold claim with her insurer, State Farm, under a standard homeowner’s policy. Under the terms of the policy, the insurer extended coverage to the insured for ALE she incurred as a result of inability to live in her residence pending remediation. Shortly thereafter the insured presented a six-month lease on another residence along with a copy of a check for $12,500 allegedly representing first and last months rent at $4,500 per month plus deposits on the residence. Based on these and similar representations, the insurer paid total ALE benefits to the insured of more than $126,000 over a two year period. As it turned out, the ALE benefits included overpayments of more than $80,000 procured through submission of false documents. The insured subsequently sued her insurer for breach of contract, breach of duty of good faith and fair dealing, and violations of the Texas Deceptive Trade Practices Act (DTPA) and Sections of the Texas Insurance Code, including violations of the Prompt Payment of Claims Act. The insurer counter-claimed and filed a motion for summary judgment on the affirmative defense of concealment and fraud.
The Federal District Court granted summary judgment in favor of the insurer after finding that the insured committed fraud in submitting ALE claims to her insurer, withheld material Facts from the insurer that perpetuated the insurance fraud, wrongfully accepted claim payments from the insurer, filed groundless causes of action against the insurer, and committed fraud on the court by submitting admittedly false documents and sham affidavits in response to the insurer’s motion for summary judgment. The court ordered the insured to repay the insurance proceeds received based on the fraudulent submissions as well as defense costs incurred by the insurer in defending the lawsuit. Additionally, the court declared the insured’s policy void and dismissed her claim with prejudice.
This case had an extreme outcome. It is not clear who the attorney was in this case but one thing is clear: There was not a sufficient screening of the case before accepting it.