36-Month Additional Living Expenses: What California Law Requires
After a declared disaster in California, insurers must provide at least 24 months of ALE coverage with a 12-month extension for delays beyond the policyholder's control. The CDI Commissioner's Opinion establishes the effective date and requirements.
Important Notice
This article is provided for general educational purposes only and does not constitute legal advice. Insurance policies, regulations, and case law can vary significantly based on individual circumstances. Consult a licensed attorney for advice about your specific situation.
ALE Is Where Carriers Cut Corners
Additional Living Expenses is one of the most disputed coverage areas after a total loss. Rebuilding a home takes years, not months. During that time you are paying rent, covering increased commute costs, feeding your family without a kitchen, and dealing with every other expense that comes from being displaced. Your policy is supposed to cover all of that. And carriers routinely try to shut it off early.
After the devastating 2017 wildfires in Northern California, the Legislature recognized what policyholders already knew: 24 months is not enough time to rebuild when thousands of homes are destroyed simultaneously. Permit offices are overwhelmed. Contractors are booked solid. Materials are back-ordered for months. The rebuild timeline is not in the policyholder's control, and cutting off ALE while someone is still displaced is unconscionable.
In 2018, Governor Brown signed three bills — AB 1800 (Levine), SB 894 (Dodd and McGuire), and AB 1772 (Aguiar-Curry and Wood) — that extended ALE coverage to 36 months for losses arising from a declared state of emergency. The structure is 24 months minimum, plus a 12-month extension that the insurer must grant when the policyholder is acting in good faith and delays are beyond their control. Beyond that, additional 6-month extensions must be provided for good cause.
The Commissioner's Opinion below establishes several critical points: the law took effect September 21, 2018 as an urgency statute; it applies to any covered loss relating to a Governor-declared state of emergency; the extension is mandatory when the policyholder encounters delays from permit backlogs, material shortages, or contractor unavailability; and additional 6-month extensions are required for good cause. This is not discretionary. The statute says “shall.” If your carrier is trying to cut off ALE at 24 months while you are still fighting permit delays or waiting for a contractor, this opinion is your ammunition.
The 36-Month Rule
For losses arising from a Governor-declared state of emergency: 24 months minimum ALE from inception of the loss, plus a 12-month mandatory extension when good-faith delays are beyond your control (permits, materials, contractors), plus additional 6-month extensionsfor good cause. The insurer does not get to decide whether your delays are legitimate — the standard is objective: circumstances beyond the control of the insured.
Full Text: Commissioner's Opinion on 36-Month ALE
California Department of Insurance — Commissioner's Opinion — September 10, 2019
Effective Date of 36 Month Additional Living Expenses Requirement
CALIFORNIA DEPARTMENT OF INSURANCE
September 10, 2019
SUBJECT: Effective Date of 36 Month Additional Living Expenses Requirement
I. Issue Presented
What is the effective date of the amendment to California Insurance Code section 2051.5(b)(2) that requires insurers, in the event of a covered loss relating to a state of emergency declared by the California Governor, to provide coverage for additional living expenses (“ALE”) for a period of not less than 24 months from the inception of the loss and to grant an extension of up to 12 additional months, for a total of 36 months, if an insured acting in good faith and with reasonable diligence encounters a delay or delays in the reconstruction process that are the result of circumstances beyond the control of the insured?
II. Summary Conclusion
Effective as of September 21, 2018, in the event of a covered loss relating to a state of emergency declared by the California Governor, coverage for additional living expenses must be for a period of not less than 24 months from the inception of the loss and an insurer is required to grant an extension of up to 12 additional months, for a total of 36 months, if an insured acting in good faith and with reasonable diligence encounters a delay or delays in the reconstruction process as a result of circumstances beyond the control of the insured. Additional extensions of six months must be provided to policyholders for good cause.
III. Background
In 2017 and 2018, California experienced several devastating wildfires, destroying thousands of homes and businesses, causing multiple fatalities, and leaving thousands homeless. Due to circumstances beyond the control of the affected survivors of these catastrophic wildfires, because of the extensive widespread damage resulting from these wildfires, it has taken longer than anticipated to repair and rebuild the destroyed and damaged homes.
For several years prior to 2017, Insurance Code section 2051.5(b)(2) provided that, in the event of a declared state of emergency declared by the California Governor, coverage for ALE was required to be at least 24 months. In the aftermath of the 2017 wildfires, the Department and the California State Legislature recognized that, in these large scale natural disasters, 24 months does not provide sufficient time to remove debris, obtain all necessary building permits, locate and hire a contractor and multiple subcontractors, and completely rebuild these destroyed homes.
As a result, the Department, the California Legislature, and Governor Edmund G. Brown Jr., with the passage of Senate Bill 894 (Dodd and McGuire, Chapter 618, Statutes of 2018), Assembly Bill 1772 (Aguiar-Curry and Wood, Chapter 627, Statutes of 2018), and Assembly Bill 1800 (Levine, Chapter 628, Statutes of 2018), increased the 24 month mandatory ALE coverage period to a minimum of 36 months if a policyholder acting in good faith and with reasonable diligence encounters delays in the reconstruction process that are the result of circumstances beyond their control. Circumstances beyond the control of the insured include, but are not limited to, unavoidable construction permit delays, lack of necessary construction materials, and lack of available contractors to perform the necessary work. Additional ALE coverage period extensions of six months must be provided by the insurance company to affected policyholders for good cause.
IV. Discussion
SB 894 sought to amend paragraph (2) of subdivision (b) of section 2051.5 to extend the time to collect the coverage limit for ALE from 24 to 36 months, for good cause, where the policyholder has suffered a total loss resulting from a “state of emergency” declared by the California Governor. AB 1772 sought to amend paragraph (1) of subdivision (b) to extend the time to collect full replacement cost from 24 to 36 months. AB 1800 sought to amend subdivision (c) to clarify a policyholder's right to collect full replacement cost whether they rebuild or replace at another location.
AB 1772, SB 894 and AB 1800 were each enacted on September 21, 2018 when Governor Brown signed all three bills. SB 894 was assigned Chapter 618, AB 1772 was assigned Chapter 627, and AB 1800 was assigned Chapter 628. Because AB 1800 has the highest chapter number, it is presumed that AB 1800 was enacted after both AB 1772 and SB 894.
Section 1.7 of AB 1800 provides in relevant part: “(b)(2) In the event of a covered loss relating to a state of emergency, as defined in Section 8558 of the Government Code, coverage for additional living expenses shall be for a period of no less than 24 months from the inception of the loss, but shall be subject to other policy provisions. An insurer shall grant an extension of up to 12 additional months, for a total of 36 months, if an insured acting in good faith and with reasonable diligence encounters a delay or delays in the reconstruction process that are the result of circumstances beyond the control of the insured. Circumstances beyond the control of the insured include, but are not limited to, unavoidable construction permit delays, lack of necessary construction materials, and lack of available contractors to perform the necessary work. Additional extensions of six months shall be provided to policyholders for good cause.”
Section 3 of AB 1800 provides that it is an urgency statute necessary for the immediate preservation of the public peace, health, or safety and shall go into immediate effect. Because AB 1800 was an urgency statute approved by Governor Brown on September 21, 2018, the amendment to Insurance Code section 2051.5 became effective immediately as of September 21, 2018.
V. Conclusion
Based on the foregoing, effective as of September 21, 2018, in the event of a covered loss relating to a state of emergency declared by the California Governor, coverage for additional living expenses must be for a period of no less than 24 months from the inception of the loss, but shall be subject to other policy provisions. An insurer is required to grant an extension of up to 12 additional months, for a total of 36 months, if an insured acting in good faith and with reasonable diligence encounters a delay or delays in the reconstruction process that are the result of circumstances beyond the control of the insured. Additional extensions of six months must be provided to policyholders for good cause.
Very truly yours,
Kenneth B. Schnoll
General Counsel & Deputy Commissioner
How to Document “Circumstances Beyond Your Control”
The 12-month extension is not automatic. You have to show that you are acting in good faith and with reasonable diligence, and that the delays are beyond your control. But the standard is not difficult to meet if you keep records. Here is what to document:
Permit Delays
Save every communication with your local building department. If your permit application sat in a queue for three months because the department is processing thousands of fire-loss permits simultaneously, get that in writing. A letter or email from the planning department confirming the backlog timeline is strong evidence. Keep copies of your application submission dates, any correction notices, and approval dates.
Material Shortages
When your contractor reports that lumber, roofing materials, windows, or other components are back-ordered, get it documented. Ask for written confirmation from suppliers showing lead times. If you ordered materials six weeks ago and delivery is not expected for another three months, that documentation proves the delay is not your doing.
Contractor Unavailability
After a catastrophe, every licensed contractor in the area is booked for years. Document your efforts to find a contractor: keep records of the contractors you contacted, when you contacted them, and when they said they could start. If you contacted five general contractors and the earliest availability was 14 months out, that is evidence of circumstances beyond your control.
Other Qualifying Delays
The statute says “include, but are not limited to” — meaning the three categories above are examples, not an exhaustive list. Debris removal delays (especially when government agencies are managing the cleanup), utility reconnection timelines, environmental remediation requirements, and HOA or design review board approvals can all qualify. Document everything.
Do Not Wait Until Month 23
Start documenting delays from day one. If you wait until your 24-month ALE period is about to expire to request the extension, you will be scrambling to prove what happened months ago. Keep a running log of every delay, every communication with your city, contractor, and suppliers. When you submit your extension request, you want a clear paper trail that shows continuous good-faith effort on your part.
When the Carrier Says No
If your insurer denies the 12-month extension or refuses to grant a 6-month good-cause extension, they are violating Insurance Code section 2051.5(b)(2). The statute uses the word “shall” — not “may.” The insurer does not have discretion to deny an extension when the qualifying conditions are met. Document the denial in writing, cite the statute and this Commissioner's Opinion, and file a complaint with the California Department of Insurance.
Related Resources
- Additional Living Expenses & Fair Rental Value
- California Wildfire Claims Guide
- Total Loss Claims
- How to File a CDI Complaint
- Insurance Bad Faith in California
- California Claim Deadlines
ALE Being Cut Off Too Early?
If your insurer is trying to terminate your Additional Living Expenses before your home is rebuilt, you may be entitled to 36 months or more under California law. A Public Adjuster can help you document qualifying delays and enforce the statutory extension.
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