Fighting the insurance co is harder than fighting fire that destroyed my home.

In My Humble Opinion
1

Help. I lost my home to a fire in February. My insurance company is settling the claim- for thousands of dollars less than the value of the home and the personal items inside were insured for. “Depreciation.” Is there any recourse? Any way to dispute the settlement amount? I will never be able to replace the home or 20 years worth of possessions: clothing, family heirlooms, appliances, electronics, jewelry, and hundreds of books.

I will likely consult an attorney tomorrow, but in the mean time, does anyone here have any advice or experience with this?

Oh, and thank you all in advance- I have been cruising this board for a couple of years, and have yet to express appreciation for the insight and humor within.

Yes, being desperate makes one suck up.

                                                     *kowtows*
2

IANAIP (insurance person), but you should read the fine print in your policy. Did you have coverage for current replacement costs (or however it’s worded)?

Either way, good luck.

3

Oh yes, Mr Blue Sky , I have read the policy many, many times. With many, many regrets. :frowning:

I was told by my agent that “we have a program that calculates the value of your belongings, and also the depreciation”
I wasn’t expecting replacement value, but do I have to accept the settlement offer? Is there a process in place to dispute the settlement amount?

4

I’m almost sure you could negotiate the final value. Perhaps you owned some things that would be difficult to replace.

Don’t be surprised if you can’t negotiate, though. After all, insurance companies are one of the many spawns of Satan.

5

Seems to me like your agent did not include guaranteed replacement cost rider to your policy. What they are doing is settling for Actual Cash Value, which is replacement cost minus depreciation.

There is nothing you can do in this instance. If you signed the application form stating $x.xx ACV, then you are legally bound to the contract.

I’m sorry you had a shitty agent. I never, ever sold anything less than RV - and I never worked on commission. A good broker/agent does what is best for the client at all times, regardless of their take-home pay.

6

Caveat: I worked in Canada. You do not say where you are. It may very well be the standard where you live to sell only ACV policies.

7

Dammit, I forgot to address this bit. You need to have those things insured for the replacement amount. Home policies (in Canada) generally assign a value that is a percentage of the home value, for the contents. If you don’t think that’s enough, you have to ask them to raise the value. It’s up to you to make sure you know how much your stuff is worth.

Also, things like antiques and jewellery should be on separate riders.

8

I understand the personal belongings stuff re “depreciation”, but generally, in most cases, the market value of residential real estate will appreciate under normal circumstances, and it certainly has in the US over the last few years (in most areas). Are they saying that your home (just the real estate value, not the contents) is worth less than when you purchased it?

9

Your Home: If your policy is written on an actual cash basis (versus replacement cost), you are probably getting hit with depreciation on things like the paint, wallpaper, carpeting, etc. The “appreciating” value of the home does not come into consideration when the home is repairable. I’ve worked in the insurance industry as an adjuster for the better part of 25 years and I can tell you it is very unusual to have a homeowners policy (in the US, of course) that provides for depreciation on the house itself. Please double check that. Unfortunately, your attorney is probably not any more versed in reading homeowners insurance policies than you are but it’s worth a shot.

Your Personal Property: Ginger is right. While it is more common to see actual cash value policies for personal property than the real estate, it’s still very uncommon for policies to be written today without replacement cost on the contents. If you have an Actual Cash Value policy, the value of your items is certainly negotiable. A “computer program” can’t possibly take all of the variables into consideration. The computer only has the “average” age of the items to base a settlement offer on. For example, you may have had a weedeater that was 4 years old but only used twice. Your weedeater would be worth more than the computer “averages”. You may be asked to document the usage or purchase dates but it may be worth your time.

Lastly, if you do, indeed, have an actual cash value policy for both your home and it’s contents, you have been paying very little premium for insurance. The premiums for replacement cost are quite a bit higher than for ACV policies because, obviously, the insurance companies pay out a lot more on claims for replacement cost. When you choose to buy an ACV policy, you are making the choice to pay less premium up front to receive less coverage at the time of a claim. It’s a gamble. If you would have never had a fire, then your choice to buy the minimum coverage was a good one. I don’t know how long you’ve had this policy but you may have saved enough in premium over the years to overcome your loss by “depreciation” now.

If you weren’t aware of the provisions of your policy and you DIDN’T choose to buy minimal coverage, then perhaps a call to your state Department of Insurance is in order. Your agent has an obligation to explain the basic coverage to you when you purchase the policy. If your agent made a mistake, he may also have an “Errors and Omissions” policy to cover you if he goofed.

[soapbox]Insurance is complicated. I’ve maintained for many years that absolutely everyone should be required to take an insurance class in both auto and homeowners insurance in high school. Insurance affects absolutely everyone and practically no one has a clue what’s covered and how it’s covered. Consequently, insurance companies become the “Spawn of Satan”. Do you realize what this world would be without insurance? You’d never be able to get a mortgage or a car loan because a bank would not be assured that the loan would be covered if something happened. Business owners would only be able to stay in business until someone falls on their property. Their business would be lost paying for someone’s injury. Life as we know it would stop dead in our tracks. Insurance companies and their employees are not “Evil Minions of the Dark Lord”. [/soapbox]

[sub]Disclaimer: This is my personal opinion based on my experience in the insurance industry. I am not a lawyer and this should not be construed to be any form of legal advice. Blah, blah, blah. [/sub]

10

Ruby, this was my fourth home. I owned it for three years, and yes, it is a total loss. Each time previously, I had riders to cover jewelry and antiques. This was a quickie mortgage that I arranged while living in another state and working too many hours. When reminded at closing to secure insurance, I rushed to decision in order to finish the closing and get back to work. Of course I planned to refinance in the near future and upgrade the insurance… (insert your favorite putz comment here)

I know I am in trouble here, I just wanted to hear if anyone had any success in negotiating the settlement amounts.

But wait, there’s more…

The home was surrounded by mature trees, 30+ years old. The fire seriously damaged 3 of those trees, (boiled the sap in 2 of the trees, blisters all over the trunks) and though they are currently still standing and have nice new growth on one side, I am certain they will fall on the crew that is preparing to clean up the debris. My insurance allows 500 per tree for removal. My agent feels that the trees are not damaged enough to be removed, and is refusing to release funds for this as well. In fact, he has threatened a third trip to my home (6 hours from his office) in order to view the trees and give his professional opinion about the state of their health.

Ruby , thank you for taking time to thoroughly explain the process. It is too late to help me, but if anyone reading this is preparing to buy a home, this should be required reading.

11

Sorry for getting so verbose Mudskipper. You’ll hear no putz comments from me. You are, unfortunately, among the majority of insurance consumers out there. I would be in the same boat if I didn’t do this for a living.

The short answer to your question is, yes, the settlement offer is somewhat negotiable.

There’s always a little “wiggle room” because of special circumstances surrounding your particular property.

Depreciation is pretty simple. If the average lifetime of an object is 10 years, then it would depreciate about 10% a year. Some things like clothes depreciate quickly. Other things like a can opener may have a 20-year life expectancy. My rule of thumb is that if it’s still in usable condition, I will normally not deduct more than 50% depreciation from the current replacement cost no matter what it’s age.

You may, however, have to go through the inventory line-by-line to discuss the value of each item. I would recommend starting with the high dollar items and leaving the little stuff alone. It’ll drive you nuts before you’re done if you try to negotiate every Q-Tip.

Good luck to you. There’s nothing more devastating than a fire. My heart really goes out to you.

12

Mudskipper,

If it’s a matter of opinion between you and the Insurance Mafia (We’re sorry, Mr. Mudskipper, but we feel that the replacement value of your Faberge Egg is $3.87) you might want to contact your state Insurance Commissioner.
A co-worker was given a ridiculously low replacement offer on a damaged boat and went to the Insurance Commission. Turns out the company had a long list of complaints about low settlements and the Commission “strongly suggested” a larger settlement. He got it.

Yeah. Right. Wanna pull the other one?

13

I’ve never negotiated the insurance claim on a house, only on a car, so take these suggestions for what they’re worth. For the record, all the research we did on our car paid off when the guy actually gave us a few more dollars than we were asking for. We provided pages of proof that our car was worth about $5500. His initial number was about $2000.

Would an appraisal on houses of a similar size and/or model help in determining how much your house is worth?

For those trees, can you request independent verification? I can’t think the adjuster (is that the right word?) would be an expert in whether a tree is dangerous or not and needs to be removed.

How long can you hold off, and are they paying for your temporary stay? Something a family member told us was to not hurry to accept the offer. In the case of our car, the insurance company was paying for the rental, so they had more incentive to hurry than we did.

Do homeowner’s insurances include something to account for those millions of little things you have in your home? My husband was in high school when his house burned down, so he was only peripherally aware of what his parents had to go through, but he remembers having to run to Wal-Mart all the time. Things like pens, pencils, paper, a new phone, a package of batteries, stamps, etc. It’s easy to remember that you have a TV, a DVD player and a drum set. But do you remember that you had an electric pencil sharpener, a box of pushpins, and a boxcutter?

Again, I’ve only made claims on auto insurance, and I have no more knowledge of the insurance industry than the average jane.

14

DeadlyAccurate , I am not rushed to cash the insurance checks. So far I have received one check (not cashed), to cover the mortgage. The check is in the amount that the house was appraised at 3 years ago when I bought it. Do you suppose that in the last three years the home appreciated in value at all? And would it help to have the orginal appraiser evaluate the current market and estimate a new value? Or course I made many improvements to the home, but have absolutely no evidence of that.

And of the inventory- I haven’t seen it yet. It should arrive any day now, and I will sort through it from high dollar amounts down, thank you, Ruby.

No one in my immediate sphere has dealt with this before, and the suggestions and comments here have helped tremendously. If anyone else has anything to add, whether rumor, second-hand information, or expert opinions from those like Ruby and Mr. Blue Sky I would greatly appreciate it.

I have been too overwhelmed with facts and figures to mourn the loss yet- but I am starting to feel picked on and more than a little homesick.

15

I’ve only lived in my house for 4.5 years, so I’m not sure how quickly they appreciate. I wonder if a comparison of neighboring houses would give an idea of the appreciation value of yours.

16

Since the house was a total loss, the insurance adjuster (IMO) would have had to have had a real estate appraisal completed on the home to document the value. The insurance company owes you the lesser of two amounts…(1) the Actual Cash Value or (2) the full limit of your policy.

“Actual Cash Value” has traditionally been defined as “replacement cost less depreciation”. Many states have extended that definition to include “market value” as well. It’s in everyone’s best interest to have a real estate appraisal completed on the property to establish it’s market value and it should not be at your expense.

What kind of improvements have you made? If it’s things like paint and wallpaper, the value of the house will not likely have increased (although it’s still a negotiation point). If you remodeled the kitchen or bath, however, the value may be increased. If the house hasn’t been bulldozed yet, surely there is some evidence left of your improvements. If you need to, go back to where you bought your materials and ask them to provide duplicate receipts. Credit card companies may also be able to document your purchases.

If an appraisal hasn’t already been done, the appraiser also have some “wiggle room” in establishing the value of your home. When I re-financed a couple of years ago, the mortgage company sent out an appraiser to inspect my home. In order to avoid paying PMI, the house had to appraise at “X”. I told that to the appraiser and lo and behold, the value of my home according to his appraisal was “X”! He had to search a little longer but was able to find comps in my neighborhood to support his value. If you know a realtor, you can also do some preliminary checking on your own. Remember, though, that you are looking for the actual selling price of comparable homes, not the asking prices in the MLS books.

17

Absolutely positively right. Call an arborist in your area to provide an opinion on the trees. Again, the insurance should cover the cost of the expert’s opinion.

18

You’re certainly getting a lot of good suggestions here. I really hate to see anyone go through what you’re going through. All I can possibly add is that on a call-in talk show years ago the insurance adjuster who was answering questions said that “to get a claim settled, first go to the president’s [of the company] office, then go (or say you will) to the Insurance Commissioner’s Office.” That’s all I wrote down, just in case I ever needed it. Others here might know if seeking out the company president is a good idea or not.

I wish you all the best,
MizQuirk