Total loss fire! Can I still collect replacement coverage?

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Latest post 08-10-2012 1:13 PM by Shauna2. 32 replies.
  • 06-05-2012 2:20 AM

    • Shauna2
      Consumer
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    • Joined on 06-05-2012
    • NJ
    • Posts 21

    Total loss fire! Can I still collect replacement coverage?

    I had a total loss fire in jan 15 of this year. The house was so badly damaged it had to be demoed (city forced it). I decided not to rebuild becasue the house was in a bad area and i really didnt want the hassle of building when I wouldn't get much for selling it. I bought the house for 60000, however it was fully redone with new electic & plumbing, new floors walls etc. The insurance company offered me around 142000 that included the demo work which came out to around 13,490. The insurance decided to give me the ACV of the property instead of the replacement cost because i decided not to rebuild. However, their estimate to rebuild came out to 267,000. They used the BOARD EVIDENCE RULE to come up with that number. The BER was not stated in my insurance contract as a means of payment if a disaster happens. I have replacement cost insurance. Can the company do this?  Also my lot might be declared non buildable because it is too small by city standards (it was a 1/2 duplex on a small lot). If that is the case, isn't the company required to pay the full replacement cost so I can purchase another home? Please help. I want the money to purchase a new home, but I don't know how to go about arguing my case. I am against rebuild for personal reasons. Extra info: Im in the state of NJ

  • 06-05-2012 8:42 AM In reply to

    Re: Total loss fire! Can I still collect replacement coverage?

    Shauna2:
    The insurance decided to give me the ACV of the property instead of the replacement cost because i decided not to rebuild

    That's one of the conditions of your policy.

    Shauna2:
    They used the BOARD EVIDENCE RULE to come up with that number. The BER was not stated in my insurance contract as a means of payment if a disaster happens. I have replacement cost insurance. Can the company do this?

    Yes.

    It's the Broad (not Board) Evidence Rule.

    The BER is based on NJ case law and has been upheld for a very long time.

    NJ was in my claims territory. I used the BER for many years.

    Shauna2:
    Also my lot might be declared non buildable because it is too small by city standards (it was a 1/2 duplex on a small lot). If that is the case, isn't the company required to pay the full replacement cost so I can purchase another home?

    No.

    Your policy also has limitations on what is paid when the actions of civil authorities affect the property.

    Shauna2:
    Please help. I want the money to purchase a new home, but I don't know how to go about arguing my case.

    You might start by invoking the Appraisal provision of your policy.

    Read it, and read the other provisions I alluded to. If you can't find them or can't understand them come back to this thread and let me know.

    • The right of the people 
    • to keep and bear arms,
    • shall not be infringed.
  • 06-07-2012 3:58 PM In reply to

    • Shauna2
      Consumer
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    • Joined on 06-05-2012
    • NJ
    • Posts 21

    Re: Total loss fire! Can I still collect replacement coverage?

    Thank you thank you thank you. Adjuster jack. I will read the policy and get back to you in a day or two. The language is so complicated in the policy that it is hard to understand. I will re- read it. i want to write a letter to the president of the company becasue I feel they are trying to get over on me. They did not even want to pay for fencing for my lot. I had to come up with the statue to let tthem know that the city requires it. Also, the house was demoed. i know they appraised the property, but I would want my own appraisal. I am a realtor so I can do my own appraisal, but I have read that it is helpful and a better way to plead my case if I can get my own professional appraiser. Can an appraiser still appraise the house if I just have inside pics (before the fire), outside pics, the tax report with all square footage, etc?  I will DEFINITELY get back to you.

  • 06-07-2012 4:38 PM In reply to

    Re: Total loss fire! Can I still collect replacement coverage?

    Shauna2:
    I will read the policy and get back to you in a day or two.

    Make sure you come back to this thread and keep it going.

    Shauna2:
    The language is so complicated in the policy that it is hard to understand.

    Some of it is, some of it isn't.

    Paying only the ACV if you choose not to rebuild is proper.

    It's determining the amount of the ACV that could be problematic.

    The Appraisal provision of the policy is one of the easiest to understand and goes something like this:

    • Appraisal
    • If you and we fail to agree on the amount of loss, either may demand an appraisal of the loss. In this event, each party will choose a competent and impartial appraiser within 20 days after receiving a written request from the other. The two appraisers will choose an umpire. If they cannot agree upon an umpire within 15 days, you or we may request that the choice be made by a judge of a court of record in the state where the "residence premises" is located. The appraisers will separately set the amount of loss. If the appraisers submit a written report of an agreement to us, the amount agreed upon will be the amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will set the amount of loss.
    • Each party will:
    •      1.  Pay its own appraiser; and  
    •      2.  Bear the other expenses of the appraisal and umpire equally.

    Shauna2:
    i want to write a letter to the president of the company

    Probably would be a waste of time as there are proper procedures and remedies like Appraisal. Any time customers wrote to the President of my company about something I did all he did was send it down the chain of command and my supervisor would have me write an explanation that went back up to the President. Then he'd write to the customer that I didn't do anything wrong.

    By not using the proper remedies you just risk delay and futility. But that's up to you if you want to try the letter first.

    Shauna2:
    I feel they are trying to get over on me.

    Maybe yes, maybe no. But that's what everybody says when they don't get what they want from an insurance company.

    Shauna2:
    They did not even want to pay for fencing for my lot. I had to come up with the statue to let tthem know that the city requires it.

    If the fencing was not damaged then it isn't covered. If the city's requirement activated a code upgrade part of the coverage how would your insurance company know that until you showed it to them?

    Shauna2:
    Also, the house was demoed. i know they appraised the property, but I would want my own appraisal. I am a realtor so I can do my own appraisal,

    No, you can't. You are not an independent, unbiased third party. The insurance company would throw your appraisal right in the trash and rightly so.

    Shauna2:
    I have read that it is helpful and a better way to plead my case if I can get my own professional appraiser.

    It's not just helpful and better, it's the only way of presenting a credible Appraisal to the insurance company. But it's not that simple either. Under the Appraisal provision, you get an appraiser, the insurance company gets an appraiser and both submit their appraisals to an impartial umpire who makes a determination.

    Shauna2:
    Can an appraiser still appraise the house if I just have inside pics (before the fire), outside pics, the tax report with all square footage, etc? 

    Yes, that's exactly how it works.

    By the way, here's an article that explains the legal development of property adjusting:

    http://www.wegandmyers.com/Articles/Article-29.aspx

     

    • The right of the people 
    • to keep and bear arms,
    • shall not be infringed.
  • 06-08-2012 12:11 AM In reply to

    • Shauna2
      Consumer
    • Not Ranked
    • Joined on 06-05-2012
    • NJ
    • Posts 21

    Re: Total loss fire! Can I still collect replacement coverage?

    Thank you Thank you so much Adjuster Jack!!!!

  • If you and we fail to agree on the amount of loss, either may demand an appraisal of the loss. In this event, each party will choose a competent and impartial appraiser within 20 days after receiving a written request from the other. The two appraisers will choose an umpire. If they cannot agree upon an umpire within 15 days, you or we may request that the choice be made by a judge of a court of record in the state where the "residence premises" is located. The appraisers will separately set the amount of loss. If the appraisers submit a written report of an agreement to us, the amount agreed upon will be the amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will set the amount of loss.
  • Each party will:
  • 1. Pay its own appraiser; and
  • 2. Bear the other expenses of the appraisal and umpire equally.
  • ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

    the above is exactly what it states in the policy. To a tee. now how does this help me is the question. The BER seems to have many factors. The examiner told me that they took the cost to rebuild --- 267,000, the assessment which came to 207,000 and what I actually paid for the property which is 60,000. They then divided it by 3 which equalled the ACV. Now is the 207,000 typically the appraisal? He told me the actual name of it, but I misplaced the paper I wrote it down on. Now if I get a appraiser to appraise it for more (than 207,000) I can get more for the  ACV. Correct? But what if they appraise it for less? I have already cashed the ACV check, but I have not signed any proof of loss forms or final payment forms, as they are waiting for me to start building or for the 6 month clause in the policy to run out. One or the other. The only thing I signed for is the contents claim and the demo claim.  Would I have to give back money if they appraise it for less than the original (207,000)? Also, i cannot build on the original lot because it is too small. In the policy it says that if premise is rebuilt on a new lot it would be limited to the cost incurred if the building had been built on the original lot. So does this mean that they (ins company) would not be obligated to pay for a new lot. Those monies would come out of the cost to replace the property. Correct?

    now the appraisal is for the amount of loss. not for the building. correct? I would really like to know how I should go about using the appraisal to my benefit. thank you in advance.

  • 06-08-2012 1:35 AM In reply to

    Re: Total loss fire! Can I still collect replacement coverage?

    When did you pay $60,000 for the property?

     

    • The right of the people 
    • to keep and bear arms,
    • shall not be infringed.
  • 06-08-2012 2:26 AM In reply to

    • Shauna2
      Consumer
    • Not Ranked
    • Joined on 06-05-2012
    • NJ
    • Posts 21

    Re: Total loss fire! Can I still collect replacement coverage?

    I bought this property the end of oct of 2011. The fire happened in Jan of 2012.

  • 06-08-2012 9:18 AM In reply to

    Re: Total loss fire! Can I still collect replacement coverage?

    Shauna2:

    I bought this property the end of oct of 2011. The fire happened in Jan of 2012.

    Earlier you wrote:

    Shauna2:
    it was fully redone with new electic & plumbing, new floors walls etc.

    How much did you put into all the fixup?

     

    • The right of the people 
    • to keep and bear arms,
    • shall not be infringed.
  • 06-08-2012 11:13 AM In reply to

    • Shauna2
      Consumer
    • Not Ranked
    • Joined on 06-05-2012
    • NJ
    • Posts 21

    Re: Total loss fire! Can I still collect replacement coverage?

    I didn't fix it up. I bought it from  a house flipper. He redid it and I bought it. Only thing I did was put a backsplash on the kitchen and gravel in the drive way.

  • 06-08-2012 12:46 PM In reply to

    Re: Total loss fire! Can I still collect replacement coverage?

    Shauna2:

    I didn't fix it up. I bought it from  a house flipper. He redid it and I bought it. Only thing I did was put a backsplash on the kitchen and gravel in the drive way.

    So your total investment in the house prior to the fire was $60,000 & change and your insurance company paid you $142,000.

    You're done.

    Trust me on that. You can spend thousands on expert appraisers and lawyers and you won't see another nickel.

    The Broad Evidence Rule has been more than generous to you.

     

    • The right of the people 
    • to keep and bear arms,
    • shall not be infringed.
  • 06-09-2012 1:09 AM In reply to

    • Shauna2
      Consumer
    • Not Ranked
    • Joined on 06-05-2012
    • NJ
    • Posts 21

    Re: Total loss fire! Can I still collect replacement coverage?

    Iunderstand what you are saying. But what about the appraisal of the damage. That is what is appraised correct? I have no house. It was total demoed. The damages are surely more than 142 k. I want what is rightlyfull mine. If the appraisal is more, which it most likely would be, then I want that. How does this mediation process work. I have to write a letter to the examiner or president?

  • 06-09-2012 1:25 AM In reply to

    Re: Total loss fire! Can I still collect replacement coverage?

    Shauna2:
    Iunderstand what you are saying. But what about the appraisal of the damage. That is what is appraised correct? I have no house. It was total demoed. The damages are surely more than 142 k.

    Then rebuild.

    Shauna2:
    I want what is rightlyfull mine

    What's rightfully yours is what you got. You didn't have a house before you bought this one and now you have 142K to put towards another one instead of just 60K that you put toward the destroyed one.

    You might have a claim on Additional Living Expenses for the reasonable amount of time it takes you to find a regular place to live.

    Shauna2:
    If the appraisal is more, which it most likely would be, then I want that.
    .

    That's not how it works. You'll submit an appraisal to the umpire. The insurance company will submit documentation of how the Broad Evidence Rule was applied to your claim. The umpire will make a decision.

    Given that one of the factors involved in the Broad Evidence Rule is how much you invested in the house I can almost guarantee that the decision will be in favor of the insurance company.

    Shauna2:
    How does this mediation process work. I have to write a letter to the examiner or president?

    Written notice to the claim rep that you are invoking the Appraisal should suffice. It's customary to identify your appraiser in that notice.

    Before you do that, though, you would be wise to interview several appraisers and get opinions on whether or not you have a chance of getting any more money.

    • The right of the people 
    • to keep and bear arms,
    • shall not be infringed.
  • 06-09-2012 9:43 AM In reply to

    • Shauna2
      Consumer
    • Not Ranked
    • Joined on 06-05-2012
    • NJ
    • Posts 21

    Re: Total loss fire! Can I still collect replacement coverage?

    It says in my policy that if for whatever reaso I cannot build on my lot (which i cannot) then i can build on another lot. Will the insurance company give me money over the building cost to purchase another lot? Or does it come out of the total money they give to rebuild?

  • 06-09-2012 9:48 AM In reply to

    • Shauna2
      Consumer
    • Not Ranked
    • Joined on 06-05-2012
    • NJ
    • Posts 21

    Re: Total loss fire! Can I still collect replacement coverage?

    Also, what if they do rule in the insurance compnaies favor. Then what? What if it is even below 142k. Do i have to give any of the money back. I have to add that I have to pay the demo company around 13400 and my public adjuster 5500 out of 142k. So really i am not getting all that money. I know the insurance compnay  doesn't have anything to do with the adjuster i hired, but to pay for the demo takes a good chuck of money. In your opinion and experience, How much would it cost to rebuild a two family three bathroom house with the cheapest materials? Just courious. Im in NJ. 

  • 06-09-2012 11:34 AM In reply to

    Re: Total loss fire! Can I still collect replacement coverage?

    Shauna2:

    It says in my policy that if for whatever reaso I cannot build on my lot (which i cannot) then i can build on another lot. Will the insurance company give me money over the building cost to purchase another lot? Or does it come out of the total money they give to rebuild?

    In my sample copy of the standard homeowners policy it says:

    • "If the building is rebuilt at a new premises, the cost described in (2) above is limited to the cost which would have been incurred if the building had been built at the original premises."

    "(2) above" refers to the replacement cost which you would get if you did rebuild at another location. But you would not get the cost of replacing the lot with another lot.

    Shauna2:
    Also, what if they do rule in the insurance compnaies favor. Then what? What if it is even below 142k. Do i have to give any of the money back.

    I don't know. That depends on your insurance company. The practice of the companies I've worked for was not to ask for any money back if it turned out we overpaid.

    Shauna2:
    I have to add that I have to pay the demo company around 13400 and my public adjuster 5500 out of 142k.

    So that leaves you 123,100 on an investment of 60,000. You doubled your money in a matter of a few months. Insurance is not designed to make you a profit when your property is damaged or destroyed.

    Besides, it was your choice to hire the public adjuster.

    Which brings up another point. With a public adjuster working for you, he should have been well versed on how the Broad Evidence Rule is applied in NJ. Since he got you the settlement he must have known that the Broad Evidence Rule was applied properly.

    Shauna2:
      In your opinion and experience, How much would it cost to rebuild a two family three bathroom house with the cheapest materials? Just courious. Im in NJ. 

    Beats me. Rule of thumb used to be about 100 per square foot for average quality construction. But my last exposure to building costs was in 2006 before the economy and real estate collapsed. Your public adjuster should be able to answer that question for you based on todays costs.

    Something else has occurred to me.

    You've written:

    Shauna2:
    Also my lot might be declared non buildable because it is too small by city standards (it was a 1/2 duplex on a small lot)

    Also, i cannot build on the original lot because it is too small

    Which is it? "Might"? or "Cannot"?

    Have you submitted plans to the city to rebuild what you had and been denied a permit? Or just how did you come to the conclusion that you cannot rebuild on that same lot?

    Be specific about that.

     

     

    • The right of the people 
    • to keep and bear arms,
    • shall not be infringed.
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