Homeowners sue Chubb over disputed appraisal award and ALE coverage
A Minnesota couple is suing Chubb over a disputed portion of an appraisal award and a looming cutoff in living-expense coverage.
In a lawsuit filed March 2, 2026, in the US District Court for the District of Minnesota, homeowners Mohammad and Mona Sabri allege that Chubb Indemnity Insurance Company has not fully paid a fire loss and is refusing to extend Additional Living Expenses (ALE) even though, they say, delays in rebuilding their house stem largely from the insurer's own actions.
According to the filing, the Sabris' Edina, Minn., home was rendered uninhabitable by a March 25, 2024 fire. They were insured under a Chubb Masterpiece homeowner's policy with a dwelling limit of $5,262,000. After months of adjustment and disagreement over the scope and cost of repairs, the couple invoked the policy's appraisal clause in February 2025.
The lawsuit states that on December 10, 2025, the appraisal umpire issued an award for the dwelling loss, setting reconstruction at a "Base Award Total" of $3,050,000 plus $610,000 for General Contractor Overhead and Profit, labeled "Paid When Incurred." Chubb later paid the base amount for reconstruction but not the $610,000, the Sabris say.
Instead, the filing says Chubb told them it would not pay the overhead-and-profit component unless they produced a "properly executed and notarized general contractor agreement" together with itemized estimates, subcontractor bids, permits, architectural drawings or plans, a payment-draw schedule and a project schedule. The couple alleges that neither the policy nor the appraisal award imposes those conditions and that the "Paid When Incurred" language only requires proof that overhead-and-profit costs have been or are being incurred, not the hiring of a third-party general contractor.
The lawsuit notes that Mohammad Sabri is acting as an owner-builder on the reconstruction project and claims he is incurring project-management and coordination costs that fall within overhead and profit.
The second major issue for insurers is the handling of ALE. The policy language quoted in the filing states that extra living expenses are covered for a period beginning at the date of loss and ending with, among other options, "up to two years from the date of loss, or a later date if agreed to by us," or "the reasonable amount of time required to restore your house or other permanent structure to a habitable condition."
With the two-year mark of March 25, 2026 approaching, Chubb has taken the position in correspondence that ALE ends on that date, according to the lawsuit. The Sabris argue that their home remains uninhabitable and that "the reasonable amount of time required to restore" the property has not yet been determined.
They further allege that Chubb's own conduct made timely reconstruction impossible. The filing points to a lengthy dispute over a steel beam damaged by the fire, which the City of Edina allegedly required to be addressed through an engineering plan before work could move ahead. It also cites instructions, attributed to Chubb and its appraiser, not to begin repairs before the appraisal concluded, and a separate federal lawsuit Chubb filed in August 2025—Case No. 25-cv-3164—seeking to halt or delay the appraisal. That action was voluntarily dismissed in November 2025 after a requested temporary restraining order was denied, and the Sabris claim it delayed the appraisal by about five months.
The suit pleads breach of contract for the unpaid $610,000, breach of contract for refusal to extend ALE, a request for declaratory judgment on Chubb's obligations, and a claim for intentional infliction of emotional distress. The couple seeks payment of the $610,000, ongoing ALE (described as roughly $12,000–$13,000 per month), and at least $5 million for emotional distress.
Chubb has not yet filed its response, and no court has ruled on the allegations. For insurers and claims professionals, the case bears watching for how a court may view documentation demands tied to a "Paid When Incurred" designation and the interplay between fixed ALE time limits and delays allegedly linked to an insurer's own handling of a large loss.
