Experiencing Issues with Our Homeowner’s Insurance Company?
We recently filed a homeowners insurance claim for smoke and ash damage that forced us out of our home. The insurance company provided us with a $15,000 advance under our “loss of use” coverage to help cover hotel stays and meals while we’re displaced. Initially, they sent a “trusted vendor” to assess the damage, who estimated the total cost for cleaning the interior and exterior of our home and garage, as well as replacing all contaminated attic insulation, to be $35,000.
However, the insurance company didn’t agree with this valuation and had an adjuster conduct a separate inspection. This adjuster concluded that the required repairs would only cost around $8,000, a figure significantly lower than the original vendor’s estimate and the quotes we’ve obtained from other contractors. Based on this lower assessment, the insurance company issued us an additional check for $8,000.
We have a couple of pressing questions:
-
Can They Do This? The insurance company seems to acknowledge that their adjuster’s valuation is on the low side, yet they’re stating that if we want more than $8,000, we need to actually hire a contractor to complete the work first. This feels unfair, as it seems like they are artificially lowering the claim amount to minimize their upfront payment. We do have extended replacement cost coverage, and the adjuster’s report indicates that there’s no depreciation on the recommended services. Is this standard practice?
-
About the Unspent Advance: The insurance company informed us that any funds we don’t use from the $15,000 advance for loss of use will be reallocated to cover our dwelling or personal property claims. This means that even if they determine our dwelling losses exceed $8,000, they will use the funds from our loss of use advance to settle those costs. Do they have the legal right to do this?
I’m sorry to hear about the challenges you’re facing with your homeowner’s insurance claim. Here are some insights regarding your questions:
Regarding the Adjuster’s Valuation and Payment Conditions: It’s not uncommon for insurance companies to have different valuations from their adjusters and their “trusted vendors.” However, if you believe that the amount they assigned is unfair or insufficient, you can question their assessment. Since you have Replacement Cost Value (RCV) coverage and there’s a stated 0% depreciation, the insurance company’s requirement that you complete the work to receive the full amount can feel unjust. They typically should provide a fair settlement based on the actual costs to bring your home back to its pre-damage condition. It may be beneficial to gather estimates from reputable contractors to present a solid case for a higher payout. You can also consider requesting a second opinion or involving a public adjuster who can advocate on your behalf.
About the Reallocation of Loss of Use Funds: Insurance companies often have specific clauses about how they pay out for different types of claims and advances. Generally, loss of use payments are intended to cover your living expenses until your home is repaired, while dwelling losses typically are paid separately. Depending on your policy’s specific language, it is typically not standard practice for an insurer to reallocate advances for loss of use to cover property damage. You may want to review your policy closely or consult with an insurance professional or legal expert to understand your rights better and whether this practice is permissible under your specific policy.
In both cases, keeping detailed documentation and communicating clearly with the insurance company can be crucial. If you continue to encounter roadblocks, seeking legal advice or help from a consumer advocacy group may provide additional support. Good luck!