What has your experience been with fire damage rebuild?
I have not had extensive experience doing insurance work. Most of what I have been exposed to has been simple fairly straight forward claims like roof, window, siding replacements.
A past customer had a house fire and his insurance company declared it a total loss. They set a number to the total loss, and after all the back and forth we finally landed on an actual number that made sense to rebuild (42k more than the original established loss amount)
When they issused the cash value payment of the loss (30% of the loss) they explained that this home was not falling under the normal standards they have for recoverable depreciation/initial cash payout ratio. And they would work with the homeowner and myself for future payments. (the insurance companies normal policy is that all recoverable depreciation is paid once a C.O. is obtained)
We have struggled to work through very little funding with the project and are approching the end regardless of the situation we have had to work with. Bottom line we are at 90% completion and still have to see 50% of the claim.
Aside from advice about taking the job under that payment schedule, I would like to know if any of you have had experience with total loss claims and what you have experienced in terms of payment schedule.
The insurance company seems to think that spec house building and custom home building are interchangable and are unwilling to work with the homeowner about releasing more funds.
Idealy the homeowner would have secured a line of credit or loan to fund the project but they are in no situation to do so and I was aware of that when negotiating a contract with them. I know what I walked into, just curious of others experience on this kind of work.
Thanks.
Mark122
Replies
who's line is it anyway?
Mark,
Seems to me your looking for a silver bullet after the fact. And you know the facts. IMO there reallly is no choice other than to critique the payment schedule agreed upon. Personally, I feel the owner was fed a line by the insurance company ...and the owner bit on it.
If you negotiated and agreed to a total settlement, then why did you (or owner) accept a 30% cash payment to begin with? Personally I would have not deposited the check and written them a letter explaining why. Based on my experience, the insurance company will always low ball the payout and just hope you are eager enough to deposit it. I'm not an attorney, but I feel that once you deposit the check, you have compromised your bargaining position. You certainly should not be in a position of having done 90% of the work on 1/3 of the settlement proceeds.
Deadnuts appreciate the reply. No silver bullets needed. I knew what I was walking into, and althought i would have like to have drawn money throughout the project as I am accustomed I made my bed and slept on a rock!
The issue is not the amount they will pay out, eventually they will release the remaining funds and everyone will walk away happy, my question (which may not have been stated clear enough) is what experiences others have had when doing a custom rebuilds under these situations. I guess Im trying to figure out if this is just a Liberty Mutual terrible policy, or if this is a all around accepted evil when taking on total loss claim rebuilds.
I may be completely off but I just can imagine an insurance company paying out 78k as the cash payout and alloting 158k as recoverable depreciation (that is not paid until the project is complete) and expect homeoweners or contractors to juggle the 158k for 5-7 months...I have been know to be wrong, ask my wife!
I can't either
Mark,
I recently settled a claim for tree damage to one of my rental properties. The recoverable depreciation amount held back amounted to 2% of the settled claim. Ninety eight percent was cash in hand before the repair work started. That doesn't square at all with your experience.
Granted this was not a total loss claim, but I don't see the principle being any different. BTW, my initial payout was only 25% of eventual negotiated settlement. Probably typical. At any rate, I didn't care because that didn't get deposited until the 98% amount was in hand. It took a few choice letters and a full month to settle, but was favorable in the end. Remember, loss of use (rental loss in my case) keeps the settlement meter ticking. Feet dragging cost the insurnace company (not me) more money.
Again, my personal advice is: Do not settle or deposit any funds (or start the project) until a settlement is negotiated and setteled--in writing and in full. If the recoverable depreciation is unreasonable, don't settle until it is. If it is not the full amount, at least get a specific draw schedule in writing that allows the insurane company to finance the repairs. If you aren't able to achieve a fair settlement as a policy holder, then hire an attorney to do it for you. In my experinece, courts favor policy holders. Insurance companies know this. Once you strongly advocate for a fair settlment, I think you will find that they quickly change their tune. If it comes to an attorney getting invovled, then things get real expensive, real fast. They don't want that anymore then a policy holder does.