FRV United Policyholders Staff asked 3 years ago

I am trying to get our AAA insurance to pay FRV for a furnished rental rather than an unfurnished rental. I have gotten quotes from a realtor on their letterhead as requested but the adjuster keeps telling me they will only pay for an unfurnished rental. He keeps sending me the policy language, which makes no mention of furnished vs. unfurnished. Seems like the FRV for the home we lost should be for a furnished property, since it was. Below is the most relevant part of his most recent email: “AAA has interpreted the Loss of Use of the policy, as ether you elect to do the ALE which allows you to provide rental receipts for lodging and additional cost of being out of your home OR – FRV which is one payment each month to cover all your expenses for being out of the home. “With Fair Rental value – if elected – you do not have to provide any receipts, once the FRV figure has been established this is all inclusive for all expenses while out of your home. This was meant to simplify the process. So from this Realtor statement we can go with the $ 3650 a month with no additional expenses accepted. “COVERAGE D – Loss Of Use The limit of liability for Coverage D is the total limit for all the following coverages. “1. If a loss covered under this section makes that part of the “residence premises” where you reside uninhabitable, we cover, at your option, either: a. Additional Living Expense, meaning any necessary and reasonable increase in living expenses incurred by you so that your household can maintain its normal standard of living; or b. Fair Rental Value, meaning the fair rental value of that part of the “residence premises” where you primarily reside less any expenses that do not continue while the premises is uninhabitable.” Thanks for looking this over. Arthur Dawson, Northern California Fire Survivor Warm Springs Rd., Glen Ellen

1 Answers
Robert Crown Robert Crown Expert answered 3 years ago

This is a common problem. CSAA is not going to concede this position quickly (or at all). They will assert that under FRV, they don’t owe for a furnished house or that they will include the “rental value of furniture” as an additional cost to be included in the FRV option. The only thing you can do is argue that the comps under FRV are lower than you are willing to accept and get the monthly dollar amount increased to the extent that you can. Alternatively, you can elect to go ALE and ask CSAA what they would prefer to do: 1) agree to pay you a little less than the ALE total cost (inclusive of furniture) per month or 2) incur the expense owed under ALE when you are more than willing to go FRV, provided you can work out a “compromise” cost that gives you both something of value? I don’t think you should expect this but you certainly have the right to ask. Most insurance carriers are penny wise and pound foolish. I wouldn’t give up on it though. If you run the numbers over a 2-3 year period, assuming you have a dollar coverage limit that could take you out that far, you can run the numbers both ways and encourage CSAA to reach a compromise agreement because in the long haul they might be saving as much as $30,000 to $50,000 (if my guesstimate is correct). Rental furnishings can run $1000 a month to upwards of $2700 a month depending on the size of your home. Good luck. Robert C.