Insurance paying vendors out of ACV Don Dowden asked 6 months ago
Insurance paying vendors out of ACV

Our insurance company is paying the vendor fees out of our ACV of contents loss. We had a garage fire that ended up pretty much a total loss. The only thing that they are trying to say is not a total loss is our kitchen dishes which were never properly cleaned before they were dropped back off to us. We had 2 mitigation companies because it seemed that the first adjuster and the mitigation company may have had a “very close working relationship.” The first mitigation company had declared everything as a total loss as did the structural adjuster that works for the insurance company and was on site the day after the fire to see in person the actual damage.

Now the 3rd adjuster steps in and declares 2 end tables and 1 coffee table along with 39 small or medium boxes of kitchen wares which in our opinion were never cleaned by regulatory standards. We sent pictures of the tables to show they were never cleaned to no concern of the insurance parties involved. This mitigation company was recommended by the adjuster. We asked for a estimate before any work began and never received one. The next thing we know they are at our house clearing out what was leftover essentially less than 10% of the house contents. The first mitigation company was $13,000.00 for removal and approximately $9000.00 for disposal which we ended up for some reason having to pay the disposal fee. The 2nd mitigation company charged us over $25,000.00 for 39 boxes or less than 10%.

Now the question is, should these and the rest of the vendor fees be taken from our ACV? It seems that these fees would come off the top of the policy amount. We are left not being able to pay for anything to recover the RCV values. All deductibles were set at 30% or over for the most part of our contents which we never really had any say so on the condition. We have asked for intervention from California DOI but they do not set monetary values.

2 Answers
Troy Willis Troy Willis Expert answered 4 months ago
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Just to recap your situation, after the fire, the initial adjuster and the first mitigation company declared a total loss for your contents. Their structural adjuster, who visited the site the day after the fire, also confirmed this total loss. However, a third adjuster later determined that certain items, including two end tables, one coffee table, and 39 boxes of kitchen wares, were not a total loss. These items were returned to you in an unclean state, despite my photographic evidence showing they were not cleaned. No action was taken regarding this issue.

The second mitigation company, recommended by the third adjuster, began work without providing an estimate despite your request. They charged over $25,000 for handling less than 10% of the house contents, significantly more than the first mitigation company, which charged $13,000 for removal and approximately $9,000 for disposal. Then you were required to pay the disposal fee separately.

Your main concern is whether these vendor fees and the costs associated with both mitigation companies should be deducted from my ACV. Typically, ACV represents the value of the items at the time of loss, accounting for depreciation, while Replacement Cost Value (RCV) covers the cost to replace the items with new ones. The high deductibles applied to your policy have further limited your ability to recover the RCV.

It sounds like you are concerned about the high deductibles that were set for your contents coverage, which appear to be 30% or higher. Typically, deductibles are agreed upon when you first purchase or renew your insurance policy. If you feel that these deductibles were set without your proper consent or understanding, it’s crucial to review your policy documents to check for any clauses or details regarding deductible amounts and their adjustments.

If you find that the deductibles were indeed set without your full understanding or against your preferences, you might have grounds to contest this with your insurance company. It’s also a good idea to seek legal advice to explore your options for addressing any discrepancies or unfair terms in your policy. Additionally, you should continue your communication with the California Department of Insurance, providing them with all relevant information about the deductibles and how they were determined.

In summary, if the high deductibles were imposed without your proper consent, it is important to review your policy, seek legal advice, and communicate your concerns to both your insurance company and the California Department of Insurance.

Given the circumstances, it seems unclear why such substantial fees would be deducted from the ACV, reducing the funds available for you to replace your lost items. You should respectfully request a detailed explanation of how the vendor fees and mitigation costs are being handled and applied against your policy, why these fees were deducted from the ACV instead of being covered separately under the policy, and the rationale for the high deductibles.

You should also ensure the California Department of Insurance (DOI) have all relevant documentation and evidence to support your case. Please address any concerns promptly and provide the requested information to ensure transparency and fairness in the handling of my claim.

Robert Crown Robert Crown Expert answered 4 hours ago
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Dear Don,

You asked this question a long time ago and the answer never got published. Our deepest apologies.

The payment to vendors should not occur, if you did not approve what they were approved to do.  With that deductible, it serves to penalize you directly, or indirectly depending on how you look at it.  You do however, have to see what you signed, and if the vendor was given permission to bill directly.  If you also gave them permission to be directly, and now you are disputing what got done and when, it may have to resolved with you disputing the payment with the vendor and asking for that money back, especially if the items they go paid to clean did not get approved for cleaning beforehand.  Had they given you a cost of cleaning inventory, you could have disputed it as total loss OR, asked the insurance company to approve a “cash out” and you would have taken the money, in lieu of having the vendor do the work.

Ask for a copy of what you signed and ask the adjuster who gave the insurer the right to pay a vendor directly and if that in and of itself is “slick” slight of hand, you can insist that the ins. co. pay that cost from their own pocket, not yours.  This will get contentious pretty quickly and I might recommend you speaking to a plaintiff insurance attorney to dispute the cost of cleaning after the fact.  It’s too messy for a Public Adjuster to take on but you can ask plaintiff coverage counsel to intercede and see if there is something to be done at this point in time.

Best,

Robert C.