Large loss insurance claim questions

[Our03z4]

Last week my parents home caught on fire. Everyone was safe at work and there was surprisingly little (to me) personal property damage but damage to the structure is pretty extensive. Now it is time for the big stuff. First insurance repair estimate came in 2 days ago they are saying this is open to discussion based on contractor estimates and is only the first estimate as extensive demo has to be done to be sure there are no unseen issues. Sounds reasonable you can't quote out what you can't see damaged if it has reached a further point than expected. Any additional issues found after demo will be spec'd and bid.


So what can I do to be sure that my parents are getting what they really should be for repairs? Weather has be less than ideal so I have not gotten to take the many many page estimate over to their house and do a walk through line by line to see if they missed things like built ins in a certain room and crown molding in another. I do know that there is already one room that does not have crown molding listed when it does have crown molding. Insurance said we use estimating soft ware updated monthly so costs are reasonably good. But when I see the bottom line "profit" insurance lists as expected for the contractor it is so low I wonder who the heck would do it?!?!


My parents are not tech savvy so I am trying to do what I can to help but I have never dealt with anything insurance (knocks on wood) and nothing else in life so large scale as what this project and its price tag is going to be. My own (separate company) insurance agent has told me to reach out if I have any questions about the process which I will do as well. Biggest question right now is Recoverable Depreciation. Basically every room in the house has some sort of custom built in cabinetry that has been installed over the years to meet our specific family taste and needs. From what I am understanding if they choose not to redo like custom built ins they loose all the Recoverable Depreciation on those items? Many of these built ins would likely be seen as in the way for someone in the future and now that us kids are grown and gone much of the house is unused so putting these items back in is not needed and those funds could be used to do other things in the home that would better suit long term resale. We are getting multiple bids for the work but it is really going to come down to timing on getting repairs started as there has already be some issues with getting insurance to agree to have a temporary roof structure put on. This was denied as the "water damage" has already been done by extinguishing the fire and "some" (8+ inches) of snow isn't going to further hurt anything when it melts as almost the entire house will be gutted.


First check is being cut and mailed to be put into escrow for the repairs to begin once we sign with a contractor. By putting the check into escrow are we in any way accepting the terms the insurance company is offering? It very clearly states that any changes to scope of damages and pricing must be pre-approved by insurance which is understood. I just don't want them depositing a check if it means they are agreeing to the insurance companies pricing before we even have one estimate back from a contractor. I am aware of what public adjusters do and if needed will encourage my parents to hire one but will likely not pursue this avenue if we are able to contract with a very local contractor that we personally know people they have worked with in the past and have been very impressed with their work and honesty in dealing with both insurance company and the homeowner.


Long post. It is a lot of info and questions and I appreciate any insight those who have had to deal with this sort of thing in the past can give.

[m630]

Have you reviewed your parents actual home insurance policy to see what coverage they have and what may be deductable and so on? If its a major concern an attorney may be of some use, while I havent personally delt with fire, i had yo deal with Sandy which flooded half my home and it was a nitemare even though i had full coverage. Personal items will be a battle unless they have lots and lots or receipts and things are relatively new and they will be heavily depreciated by the ins co. And unless they had supplemental insurance, there are limits to how much you can claim on personal items in any case.

At a minimum you may consider hiring an adjuster to counter the insurance company, they advocate for you for a fee and can help if they are smart.


Its a long road full of frustration requiring untold patience...good luck

[2000cs]

My parents had a fire 25 years ago and it resulted in so much smoke damage to the remaining structure and contents that the house was taken to the ground and rebuilt. All art was replaced if it couldn’t be conserved - in many cases it was hard to find the same piece, signed, etc. so a substitute was agreed upon. Their insurance company was great to work with for the most part - few arguments, chose their own contractor, etc.

I have the same company for my homeowners insurance. I’ve had claims in two different houses for water damage. The worst one was a water filter installed under the kitchen sink, which cracked, spraying water into the cabinet at full force for several days while we were out of town. We arrived home to see water running out of the exterior sill board and down the foundation (nice!). Cabinet drawers were full of water, cabinet bases (custom, wood) were damaged, hardwood floor (hickory) was damaged. Water rained down into the bedroom and bath below, destroying the ceiling, couple of walls, carpet and pad, and other stuff.

Insurance company had a pre-qualified contractor come to estimate the damage, we also had a contractor who had done work on the house estimate it. Our contractor, who is expensive, was less than 2/3 of theirs. So the insurance company let us contract it and they paid every dime for the work and replacement furniture.

In both cases we were straight with the insurance company, not trying to get something we were not entitled to under our insurance contracts, and working to save money where we could while still getting the full replacement rebuild. In the water damage case, we changed the layout of the kitchen, had new custom cabinets made and so forth, but we saved the appliances which had been wet at the base but were cosmetically and functionally fine. We could have replaced, but that didn’t seem right to us.

Some companies are much tougher than others, but I would try to establish a constructive relationship with the claims adjuster. Read your policy on issues like the custom cabinets. We didn’t have to replace exactly what was there - we were insured for the loss regardless of whether we rebuilt or repaired or tore the house down. Same $$ from insurance to us.

[2000cs]

Check their policy to see whether they have full replacement coverage or depreciated value coverage. That seems to be where most people argue. I carry full replacement, and pay an extra premium for it, but as you can see above it can be worth it.

[VChenz]

Hire a third party insurance adjuster who works for YOU. Have them review the quotes and other damage assesments, etc. That's the only way you can keep insurance companies or contractors from screwing you.

Also, I would only recommend you have one of those damage restoration companies do demo or clean up work but use a real contractor who is familiar with large scale home Renos/home building do the rebuild work.

[David70]

I agree with the above and hiring an expert on your side, not sure if adjuster or lawyer. Numbers are too great and insurance company understands their side really well, with goals of minimizing claims and hassles on their side that spending a little extra makes sense. While this is a place for information it is unlikely to match a true expert looking at your house and situation.

As someone in the middle of a complete gut renovation on an old house (all interior walls removed along with everything else) I would be careful about the insurance company or anyone else basing the decision on who to use as a contractor mostly based on price. Insurance company would love to go with the cheapest regardless.

[DieselDiner]

Originally Posted by David70

I agree with the above and hiring an expert on your side, not sure if adjuster or lawyer. Numbers are too great and insurance company understands their side really well, with goals of minimizing claims and hassles on their side that spending a little extra makes sense.

It's now been repeated by several posters, your parents need their own representation to deal with the insurance company. Please take that advice to heart. The insurance company is on its side, not your parents' side.

[DETRoadster]

As others have said, dont sign anything or accept any payment until you have an independent person lined up to be your advocate.

Also, force ALL correspondence with the insurance company to e-mail. Don't answer the phone when they call. Keep every single e-mail. fi they do catch you on the phone, promptly follow up with an e-mail documenting the convo and ask they to respond that they agree with your documentation.