Mercury Time Limit to Collect Full Replacement Cost Bill Miller asked 1 month ago
Mercury Time Limit to Collect Full Replacement Cost

Hi our house burned down during the Eaton Fire in Altadena.

We have a question and problem. My cousin, with both legal and real estate background brought this clause in an insurance document which Mercury Insurance sent us.

page 3 of 5

(Time Limit to Collect Full Replacement Cost)

“To qualify for replacement cost, the damaged property must be repaired or replaced. Payments

made before the repair or replacement are based on actual cash value. To make claim at

replacement cost, repairs or replacement must be completed within 36 months after our

payment for actual cash value if the loss or damage relates to a state of emergency as defined

in Section 8558 of the California Government Code or 12 months after our payment for actual

cash value in all other cases. Additional extensions of six months may be available for good

cause.”

My cousin told us that we should send the check back which Mercury Insurance issued to us, for the full amount of structural damage according to our policy. He claims that this check being issued will start a 3 year ticking clock for FULL COVERAGE.

We’ve spoken with our insurance Adjuster who has assured us that Mercury should issue extensions if our dwelling is not completed in 36 months, so long as the delay was not our fault, such as delays due to non-payment.

Should we listen to my cousin and return the check for a re-issue later, or simply deposit it?

1 Answers
Answer for Mercury Time Limit to Collect Full Replacement Cost United Policyholders Staff answered 1 month ago
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Hi Bill,

A carrier is obligated to issue payment when damages are known. This is why the carriers will often issue ‘partial payments’ while they are still evaluating your claim; they will pay you for the damages/repairs that are ‘known’ while they continue to estimate and/or adjudicate your claim. You can offer to send back the check to Mercury but be prepared that the carrier will not accept it, as they are legally obligated to pay you pursuant to your insurance policy/contract.

Unfortunately, these payments will  ‘start the clock.’ During a state of emergency you are entitled to the 36 months of rebuild time, if needed, to rebuild your home. And your cousin is correct, that you can ask (in writing) Mercury for additional 6 month extensions, providing that you are not causing unforeseen delays with the reconstruction. The carrier will want regular updates of your project and we would recommend that you provide this information monthly and in writing.

https://uphelp.org/claim-guidance-publications/sample-letter-requesting-extension-of-deadlines-to-collect-full-policy-benefits/

https://uphelp.org/wp-content/uploads/2021/07/2021_Guide_for_Adjusting_Property_Claims_in_California_After_a_Major_Disaster.pdf

All the best, UP Staff