Concerns About Our Homeowner’s Insurance Experience
We recently filed a claim for smoke and ash damage that has temporarily displaced us from our home. Initially, the insurance company provided a $15,000 advance under our “loss of use” coverage to cover hotel and meal expenses during this time. They also sent a “trusted vendor” to inspect the damage and prepare an estimate, which indicated that it would cost $35,000 to clean both the interior and exterior of our home and detached garage, as well as to replace contaminated insulation in the attic.
However, the insurance company was not satisfied with this estimate. They subsequently sent an adjuster who assessed the situation and concluded that the necessary repairs would only cost $8,000. This figure is significantly lower than the initial estimate from their vendor, and it doesn’t align with quotes we’ve received from other contractors. Consequently, the insurance company issued an additional check for $8,000 based on this new assessment.
We have a couple of questions regarding this process:
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It seems the insurance company acknowledges that the adjuster’s valuation is low, yet they claim that to receive any amount exceeding $8,000, we must have the repairs done first. Is this standard practice? It feels unfair that they might be artificially lowering the claim’s value to limit the cash they provide upfront. For context, we have extended replacement cost (RCV) coverage, and the adjuster indicated 0% depreciation for all recommended services.
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Additionally, the insurance company informed us that any unused portion of the $15,000 advance for loss of use will be redirected to cover dwelling or personal property losses. This means that if they determine our loss is greater than $8,000, they would allocate funds from the loss of use advance towards those dwelling losses. Is this permissible?
Any insights or advice would be appreciated as we navigate this challenging situation.
I’m sorry to hear about the frustrating situation you’re experiencing with your homeowner’s insurance claim. Here are some thoughts on your questions:
Can they rightfully limit payment based on their adjuster’s valuation?
Generally, insurance companies are obligated to pay claims based on the policy terms and the coverage you have. It’s not uncommon for discrepancies to arise between different assessments, but it seems there is a significant difference between the initial $35k quote from their “trusted vendor” and the $8k from their adjuster. If you have replacement cost value (RCV) coverage and the adjuster’s report indicates no depreciation, then it sounds reasonable to argue that you should be compensated for the full cost to restore the property as per the initial assessment. They cannot arbitrarily limit the payment to the lower amount without justification. Document everything and consider requesting a re-assessment or disputing their evaluation, possibly through an independent adjuster.
Can the insurer reallocate funds from the loss of use advance to cover dwelling losses?
Typically, loss of use coverage is intended to support temporary living expenses incurred while your home is uninhabitable, separate from the dwelling coverage for repairs. The insurer may be attempting to manage their payout, but reallocating loss of use funds to dwelling coverage without your consent may not align with typical policy practices. Review your policy documents carefully to see how these coverages are defined and consult an attorney or a public adjuster to get a clear understanding of your rights in relation to how your advance payment can be utilized and whether the insurer is acting within their rights.
It’s recommended to stay persistent in your communication with the insurance company and keep thorough documentation of all correspondence and assessments. You might also want to consider involving your state’s insurance commissioner or a legal professional if things do not resolve satisfactorily.