At times, temporary housing arrangements for homeowners' claimscan leave many adjusters wondering if they could have found abetter solution for their policyholders' additional living expense(ALE) needs. For instance, consider the following scenario.

An adjuster estimates the repair time of a loss to be 45 daysand has a family of four make arrangements to stay in a localextended stay hotel. Before she knows it, the six weeks have goneby and the contractor is telling her that he needs at least anothersix weeks. The hotel bill for the family already is around $5,400and if they stay in the hotel another six weeks, the adjuster willhave paid roughly $10,800 for three months of temporary housing.This figure does not account for taxes on the hotel room, mileage,meals, pet boarding, and other incidental receipts the policyholderlikely will turn in as incurred costs as a result of the loss. Shewonders if she could have done anything differently to cut down onthese expenses.

Meanwhile, the policyholder is calling about his concernsrelated to the family being out of their home. The small space ofthe hotel is wearing on them and everyone's ability to move forwardwith the claim is being affected.

Extending Your Options

Sound familiar? This is just one of many situations an adjustermight encounter when overseeing the ALE portion of a claim.However, it is important to consider how the specifics of a claimcan make a difference in deciding which avenue is best to take whenit comes to arranging temporary housing.

To effectively determine which route is best, it is paramount topinpoint how long the policyholder will be displaced. While thereare potential pitfalls and delays associated with every claim thatmake an accurate prediction almost impossible, narrowing the marginof error can reduce the overall cost of the temporary housingarrangement. In addition, it will help the adjuster — and, ifinvolved, the temporary housing provider — choose the best and mostappropriate option.

In many cases, extended stay hotels can be a great option fordisplaced policyholders. If a family will be out of their home fora short period of time — anywhere from a few days up to six weeks —keep this type of hotel in mind because of the options they offer.Many provide kitchenettes, are pet friendly, and some are willingto direct bill the insurance company. Negotiated rates also may beavailable for stays of this length. If an adjuster is confidentthat the amount of time the family will be displaced will be lessthan six weeks, choosing an extended stay hotel makes sense.

They are not necessarily the best choice, however, when thelength of time exceeds six weeks. The costs can add up quickly andoverall policyholder satisfaction often begins to plummet. Thewalls of the two-bedroom suite may begin to close in on a familyafter a few weeks in a hotel, which can add more stress to theinsured's already heightened emotional state.

As the hotel stay lengthens, the policyholder might expressinterest in other temporary solutions, such as renting a house. Asan adjuster, it is important to encourage claimants to be selectivewhen options are provided. When policyholders are anxious to getinto a home, they often will take the first one that is offeredeven though it may not suit all of their needs. This frequentlyresults in another move, which can increase stress and overallcost. Patience and excellent lines of communication between allparties are keys to a successful relocation.

Family Is Great, But…

Sometimes policyholders will opt to make other arrangements forhousing by staying with family or friends. For those lucky enough,they may use a vacation or second home. In these rare cases, if thepolicy allows for it, adjusters may cash out the policyholder foran amount deemed to be fair by both parties. This may seem like aneasy solution for everyone and works well for relocations that areplanned to last no longer than a month.

For lengthier relocations of this type, though, it doesn'talways work; everyone may want their own space after a few weeks.An insured may call an adjuster to see if there are any otheroptions available to them after spending a significant amount oftime at the home of a relative or friend. Living out of a suitcaseand comfort zone may hinder a policyholder from moving forward withother portions of the claim. It may take them longer to get theirlist of home contents together or turn in their receipts. Decisionsabout structural repairs could be delayed.

Corporate housing providers may be available for temporaryhousing in some areas. Usually, a corporate housing company hasfully furnished properties for executive or corporate relocationsrelated to business or business travel. Often, these properties arein densely populated areas and usually consist of apartments,condominiums, or town homes. Some may offer more customizedaccommodations or even single-family homes.

These properties are convenient because they come fullyfurnished; however, there may be less flexibility in terms ofproximity to the insured's residence, work place, or school. Also,a corporate housing company may be experienced when it comes tohandling corporate relocations involving executives, but it may notbe used to working with insurance-related relocations that ofteninvolve larger families. Short-term leases usually are available,but keep in mind that the shorter the term, the more the monthlycost may be, a caveat that also holds true for insurance relocationproviders.

Adjusters also may find themselves paying for utilities andhousekeeping services with corporate housing providers, fees thatdo not always meet the definition of incurred costs as it relatesto ALE coverage. For instance, a policyholder would still beresponsible for their utilities had the loss not occurred.

Use Your Resources

Another option for adjusters is insurance relocation providers,who specifically focus on relocations within the insuranceindustry. They work for both the adjuster and insured throughoutthe life of the claim by taking over the ALE portion. This includeslocating rental options that are close to the policyholder'sexisting address, which helps the family keep up their normalroutine as much as possible. They also negotiate lease terms tocorrespond with the amount of time the family will bedisplaced.

Legitimate providers will work with adjusters to understand theparameters of the insurance policy and will focus on finding homesthat are comparable to the loss property. Usually these providerscan facilitate or refer hotel stays for short-term relocations.They also may have a one or two month minimum when it comes toproviding rental properties.

Most can supply rental contents items such as furnishings,housewares, and appliances. Many families are not ready to replacethese items until they move back to their home. Often, it makessense to use rental furnishings and housewares because of the costand risk involved with repeatedly moving the replaced items.Providers also can facilitate or refer mobile housing options, suchas travel trailers, if a mobile option makes more sense. Sinceinsurance relocation providers differ in many ways, adjustersshould ask companies about these services and their associatedcosts before deciding (see sidebar “Ask and Receive” at end ofarticle).

Taking the Right Approach

Given the number of options adjusters have when it comes totemporary housing, how can they best match their decisions to theneeds of their insureds? In addition to giving carefulconsideration to repair timelines, adjusters should think carefullyabout the specific situation of the insured. Is he a single personwho needs temporary accommodations or are there several familymembers who will be relocating? Are any pets involved? Do they do alot of driving for work and school? What about errands andextracurricular activities? Are there any special needs toconsider, such as a family member who is handicapped? Do thepolicyholders live in a remote area? The answers to these questionscan best help an adjuster and a policyholder determine what makesthe most sense for their relocation situation.

Corporate housing near an insured's place of work might workbetter for a couple, while an insurance relocation provider may beable to find something right down the street that is moreappropriate for a larger family. An extended stay hotel for threeweeks might make the most sense for a water loss, while a rentalproperty for six months for a severe fire loss may be more costeffective and policyholder friendly.

Because arranging temporary housing is not an exact science, itmay be a good idea to contact a housing provider and speak to anexperienced housing coordinator who can help make assessments aboutthe appropriate course of action. Many temporary housing providersin the industry, especially those well versed in the insuranceniche, will offer this guidance. Having quality resources availableand asking the right questions can lead to cost and time effectivetemporary housing solutions as well as greater policyholder andadjuster satisfaction.

Jenna Jahn is a territory manager for DMA Insurance HousingAssistants. She is based in Denver, Colo., and can be reached at(800) 550-1911, [email protected].