Law & Ordinance - Flood Plain

[Mike7Roni]

What is the name of your state? Washington

Our home was damaged by fire in April.
The insurance company agreed to the pay for repairs - $97,000. My policy limit is $147,000 plus 10% code upgrade.

Subsequently it was determined that since we are in a 100 year flood fringe area and there was more than 50% damage; all new code applies. The home must be 1 foot above flood elevation; it's 3 inches short. Also the foundation must be replaced. It was determined by the contractor (recommended by the insurance company) that it would be cheaper to replace the home. We can get by with a modest replacement for about $160,000. The insurance company is sticking to the $97,000 because the policy does not cover "law & ordinance" except for the 10%. They are thinking about maybe paying something on the foundation under this 10% but originally objected because it wasn't damaged.

I am questioning if I have any recourse because I was under the impression that I was fully covered under the policy for the last 15 years? Did the insurance company have any responsibility to inform me of this exposure? They also collect my flood insurance; does this give me any leverage.

Sorry for the long post. About 30 months before the fire, the insurance company had an inspection of the property to determine if my insurance was "adequate" (I still have the letter). Recently, I visited the website of the inspection company. As it turns out they ordered an "observation" report to determine their exposure. The inspection company offers a second report in which "measurements are take and diagrams made" to determine if the insurance is adequate. This was not done. Since I caught the insurance company in this "mistake", does that help my case?

Thanks for help.

 

[moburkes]

What exposure are they supposed to tell YOU about? You live there, not them. It is my understanding that they will only pay for the upgrades for what was damaged. If your foundation was not damaged by the fire, then your foundation will not be covered by the policy.

It appears that you are thinking this way: Let's say that you have fuses, but the new code is circuit breakers. Your insurance company is not simply going to PAY for you to upgrade to circuit breakers. If your fuse box blows up in a fire, since fire is covered by your insurance policy, and your insurance policy would cover replacement of the fuses, at that point, they would pay to replace the fuses with circuit breakers (up to the 10% limit).

The adequacy of the insurance policy was to make sure that your home is insured for the correct REPLACEMENT COST. That's it. And, also to make sure that there are no hazards that have developed since the last inspection. Let's use your contractor's estimates. Since it will cost about $160k to replace your home, and your insurance coverage IS for at least 80% of that ($128k), then you have adequate replacement cost in the event of a total loss.

The fact that you have flood insurance with the same company means nothing - except for that fact that they may, at their discretion be nicer to you. It doesn't add any additional words to the policy that you agreed to.