H/O insurance and HUGE wildfire. Will it work ?

[Victor Newman]

Oregon.

We live in rural Oregon in a heavily wooded environment. In the event of a HUGE wildfire, such as 2018 Paradise, CA fire, in which 10K to 15K structures were destroyed....will our policy be honored by the insurance company ? There will be a long delay in rebuilding.... as licensed contractors, architects and other workers will be in short supply and no doubt bid high. There will probably be a long time frame and our $82K in lodging and meals will run out. I am guessing a 2-3 year delay.

Our 2280 sq.ft. 1993 home has a 125% limit of $511K.....or $225 per sq. ft. Do you think this is realistic if there are 5-10K homes in and around our home burned down and/or damaged ? Our home right now will sell for $400K or more. 2.5 acres, really spiffy and kept up. What will the value be if the area looks like a burned out moonscape ? Will the insurance company want to pay out $600K or more, total, for a new home worth .......what, $300K or $400K ?

We might not want to live here after a huge fire. Was told by agent we can take some $$ after mortgage paid off..... and move. This is not in writing.

Any thoughts or suggestions, please ?

 

[Zigner]

Your questions are mostly not legal questions. Your insurance company is legally obliged to abide by the terms of your policy. Questions about value, etc., are not legal questions and are so hugely speculative that nobody can answer them with any degree of accuracy.

 

[Victor Newman]

That's OK, I'll take any advice or comments.....anyone would like to post. Accurate or not. This scenario is a long shot but I am working my way up to discussing with a R/E lawyer about limits of my policy and the ramifications thereof.

 

[adjusterjack]

Zigner's right. It's not a legal issue, it's an insurance issue and I am qualified to address it for you, having spent 35 years in the insurance industry.

will our policy be honored by the insurance company ?

Of course it will. Doesn't matter how many houses are destroyed. Your insurance company will pay you what your policy says it will pay you. Since you probably haven't read it, I won't take the time to explain the whole thing to you. I suggest you read it from front to back. If you pay attention to the words on the pages you'll get the gist of most of it and you can come back to this thread with specific questions about any part that needs clarification.

I'll touch on some of the important concepts that you brought up.

Our 2280 sq.ft. 1993 home has a 125% limit of $511K.....or $225 per sq. ft. Do you think this is realistic if there are 5-10K homes in and around our home burned down and/or damaged ? Our home right now will sell for $400K or more. 2.5 acres, really spiffy and kept up. What will the value be if the area looks like a burned out moonscape ? Will the insurance company want to pay out $600K or more, total, for a new home worth .......what, $300K or $400K ?

The cost to rebuild your home has nothing to do with how many homes are destroyed. $225 per sf sounds about right but I don't know your house. Your agent has a replacement cost calculator and there is a comprehensive calculator online that you can use:

http://legacy.building-cost.net/CornersType.asp
The cost to rebuild your home has nothing to do with its market value. It wasn't that long ago that homes costing hundreds of thousands to build were selling for half that (remember the real estate crash about 2006) and in many areas of California homes sell for 2 or 3 times what it cost to build them.

In the event of a total loss of your home your policy pays you in two installments under the Replacement Cost Coverage of your policy. The first installment is the cost to rebuild less some depreciation. The second installment is the balance paid when you rebuild. Before you get alarmed about that, check your policy to see if you have any optional coverage that pays the whole amount at once.

In the standard form, if you decide not to rebuild, you get only the depreciated amount and then you can sell your land to help make up some of the difference.

With regard to your personal property you'll be expected to provide an inventory of every item you own along with documentation of ownership, cost, and date purchased. I suggest you plan ahead and take at least a photographic inventory of everything you own, keep it on a back up drive away from the house and update it periodically. Meantime get used to keeping receipts for everything you buy and keep them forever. I suggest scanning them to your computer and on to the same back up drive, kept away from the house. If your house burns down and you've done that, you'll thank me.

There will probably be a long time frame and our $82K in lodging and meals will run out. I am guessing a 2-3 year delay.

You're right. Your $82K isn't going to last long with $200 a night hotels and eating out. But it would last you several years if you got an apartment for a couple of thousand per month and ate at home while you decide what to do about the house. Yes, there could be a 2-3 year delay to rebuild. I saw that happen in 2004 and 2005 in the gulf states when the bad hurricanes hit in 2004 and then Katrina in 2005. I wasn't finished paying 2004 claims when I had to start paying 2005 claims, often to the same people who just got finished repairing their property only to have it destroyed again. Kind of supports what your agent suggests about taking the money and buying a house elsewhere, perhaps in a city not far from fire departments.

I am working my way up to discussing with a R/E lawyer about limits of my policy and the ramifications thereof.

A R/E lawyer? I'd be surprised if any R/E lawyer knows anything about how much you should insure your house for.

First, read your policy. Don't blow that off. There'll be a quiz when you come back.
Second, talk to your agent about building costs.
Third, use the online calculator as a second opinion. I find it tends to be a little on the high side.
Fourth, come back for more discussion about your insurance.

 

[Victor Newman]

Thanks for the replies. Adjusterjack: After I wrote about finding a R/E lawyer....I thought I should have said Insurance Consultant. I have discussed rebuilding costs with our agent every year. I took photos of outside and inside house last year. Lots of them. They are in our safe deposit box. I am a Luddite concerning computers...don't even have a smart phone.

I read my policy (Safeco Ultra) each year at renewal. I like to check each endorsement/option word for word, to see if anything changed. I will read EVERYTHING, again, word for word, and get back. Thanks for your help.

 

[adjusterjack]

I read my policy (Safeco Ultra) each year at renewal.

Good.

Without looking, what's the difference between Section I and Section II?

Told you there'd be a quiz.

 

[Victor Newman]

Good one, you got me....

 

[adjusterjack]

That was the easy question.

So much for reading the policy every year. LOL.

Section I is Property.
Section II is Liability.

Now go read the policy and come back for the next part of the quiz.

 

[xylene]

If you are in a position to do so, looking to approaches to make your dwelling more fire-safe would be a good use of resources.

 

[Victor Newman]

I'll be off line for a couple of days. Think I will have to hire an out-of-work Hollywood, CA Proctor to help with my answers.

 

[Zigner]

I'll be off line for a couple of days. Think I will have to hire an out-of-work Hollywood, CA Proctor to help with my answers.

Huh?

 

[quincy]

Huh?

It is a reference, I believe, to the "Varsity Blues" cheating scandal and adjusterjack's quiz.

 

[Zigner]

It is a reference, I believe, to the "Varsity Blues" cheating scandal and adjusterjack's quiz.

Ahhh.

 

[Victor Newman]

adjusterjack......still trying to delay the next quiz.....anyway I can Lots to do around the casa as the weather turned warm and irrigation needs to be turned back on after winter shutdown. BetterHalf has handed me a list of things to do. Leafs by the road side need raking and taken away. Pest control guy found carpenter ants in the crawl space.

I might have to take the policy into the bathroom for a detailed reading

 

[adjusterjack]

Or, you can read my simplified plain English homeowners policy:

PLAIN ENGLISH HOMEOWNERS POLICY​

For a period of ___year(s) ending promptly at midnight, Standard time on ________________

Property Location:____________________________________________________________

AMOUNT OF INSURANCE YOU BOUGHT: $___________________ BLANKET ON YOUR HOUSE, ALL THE ACCUMULATED FURNITURE AND STUFF INSIDE YOUR HOUSE, YOUR GARAGE (the one where you park your car, not Al's Body Shop) AND ANY OTHER SMALL BUILDING ON THE LOT, AND WHAT IT COSTS EXTRA TO LIVE WHEN YOUR HOUSE IS BURNED DOWN OR SOMETHING LIKE THAT HAPPENS, FOR SO LONG AS WE SAY IT'S OK.

WE ALSO WILL DEFEND YOU IN COURT IF SOMEBODY MAKES A CLAIM AGAINST YOU, OR PAY THE DAMAGES, AND WE'LL PAY THE MEDICAL BILLS OF SOME PEOPLE WHO GET HURT ACCIDENTALLY AT YOUR PLACE, OR SOME OTHER PLACE.

(We could spell it all out in detail, but you wouldn't understand one word of it anyway. We had to hire ten lawyers just to figure this out after we wrote it!)

CONDITIONS:

1. If anything happens and it looks like it's going to cost you money, call us right away and we'll tell you if we're apt to pay for it.

2. Our agent has already told you this is the new "all risk" policy, but even he doesn't know what he's selling, so if you have any questions, call or write to us, not some insurance salesman.

3. Don't lie to us about what happened or how much something cost or how new it is or how it never leaked before. If you try to snow us, we'll not only cancel this policy so fast it'll make your head swim, we'll pass the word around and you won't ever be able to get an insurance policy again short of the Hong Kong Mutual. There are so many regulations, and an Insurance Commissioner who thinks he's king, that we can't lie to you. So don't you give us any song and dance or we'll land on you hard.

4. Replacement Cost: forget it. You don't need it. We'll pay what we say is fair with or without any "Replacement Cost coverage," and we don't care what your neighbor's policy has on it.

5. The "AMOUNT OF INSURANCE YOU BOUGHT" listed above is the absolute cost we will pay no matter what your house and other stuff is worth or however many people sue you for any one accident, so you'd better be sure you have bought enough to cover the worst disaster that you can imagine. Don't depend on our agent for this! If he had any imagination, he'd find an honest occupation.

6. Don't bother us with a lot of questions about what is and isn't covered by this insurance. We'll tell you when you need to know. If we told you now you'd forget it in an hour, if you ever understood it in the first place.

7. YOUR DUTIES: (1) Pay the premium, and (2) call us right away when you think something's happened (don't try to analyze it, just call in.) That's all you gotta do. Don't try to get cute; see (3) above, in case you have forgotten already (which doesn't surprise us.)

8. If we think of any additional conditions, we'll let you know. By the way, if what happens involves a vehicle, airplane or boat or has to do with your job, forget it; don't call us; we don’t cover it.