L&O Question Mike Baumann asked 1 year ago
L&O Question

We lost our home in the Marshall fire and are having challenges with our law and ordinance items being funded. The codes that we need to build to are the 2021IECC codes and our insurance is saying that these costs should not exceed $50k. However, our builder has line itemed every L&O item which is coming to between $300k-$400k citing the cost difference between the 1988 and the 2021 codes. Two consultants who our insurance company hired met with us and couldn’t give every item an actual cost due to time restraints on their end, but both consultants said the the costs our builder estimated were reasonable for L&O items. One of the consultants put that in writing and sent it to our dwelling adjuster. Our insurance company is now working on getting a third engineer/consultant to review our L&O estimated costs.

What would you recommend next steps for us should be?

Thanks for your time!

1 Answers
Sandra L. Moriarty Sandra L. Moriarty Expert answered 1 year ago

Hi Mike,

Sorry to hear you are having difficulties. My recommendations are:

1) Check your policy to determine how much Law & Ordinance coverage you have. This information is usually listed in the policy declarations, but is sometimes within the body of the policy. This could be the reason why your insurance company is telling you that they can’t exceed $50,000. Many policies pay only 10% of the Coverage A – Dwelling limit.

2) If your limits are adequate to cover the $300,000 to $400,000 projected costs, then make sure that you make a clear demand in writing to the insurer, for the amount estimated by your builder. Tell them that if they disagree with any part of the estimate, to provide a detailed explanation on a line-item basis, so that you can have your builder respond.

3) Document all communications – for example, you said that both consultants agreed that the costs were reasonable, but had time constraints and couldn’t provide an estimate. (This is concerning and causes me to wonder why their time was constrained – perhaps limited by the adjuster?) Send an email to everyone involved documenting that communication, and refer the adjuster back to your builder’s estimate asking the adjuster to advise of any line items in question.

4) Make sure you also document delays. When the amount in dispute (assuming it is not an issue of low policy limits) it is not reasonable for you to move ahead with rebuilding until you reach an agreement with your insurance company on the amount of L & O coverage they will pay. This delay will affect your ALE coverage, and if you are starting to worry about time limits, make sure that you include this in your communications. Then clearly ask for them to address/resolve the issue promptly. Waiting for your adjuster to have three or four different consultants to inspect your property should not cause you any increased expenses, since the delay was on their part.

Hope this helps you get this moving in the right direction.