State of emergency insurance claim Tanya Connick asked 1 year ago
State of emergency insurance claim

I filed a claim due to damage of my fence from windstorms. A state of emergency was was declared the day the damage occurred.

My policy for separate dwellings is up to 75k and it is extended policy and for the amount to replace not the amount its worth. That being said the adjuster tried to offer me 5k when it’s at least a 30k job .

So I have two questions.

During the state of emergency claim I read that under California law they can not give depreciation estimates–is that correct? And I can use money from policy A as well?

Since the damage has occurred and now there is a potential landslide, can I ask for my full policy to pay for preventive measures? Isn’t there a law that claims filed when a state of emergency has been declared can get our full policy?

1 Answers
Selina Clark Selina Clark Expert answered 1 year ago

Ms. Connick,

Depreciation is frustrating and confusing to most people. The condition of an item, its age and its useful life are all factors to consider. Fencing (Other Structures), the paint/stain are always depreciated (unless of course it was brand new within the last few months). This is also assuming you have a Replacement Cost policy on the fence, instead of an Actual Cash Value policy, and the fence is not ‘shared’ with your neighbor.

Typically, the carrier/adjuster will prepare an estimate for the damage they see, and issue the initial Actual Cash Value payment. Unfortunately, a lot of adjusters do not have construction experience, so they generally do not realize what all is entailed in making said repairs. With your fence, depending on the style, height, whether the posts are buried in concrete, etc., you will need a contractor to provide you with an estimate to replace/repair your fence. If the company that installed it is still in business, you may want to contact them first.

Based on the CA Insurance Code, you are entitled to a “good faith” settlement. Every insurer must attempt “in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear”. [[Cal Ins Code 790.03 (h)(5)]] An insurer cannot make an “unreasonably low” offer, that is, attempting to settle a claim “for less than the amount to which a reasonable person would have believed he or she was entitled by reference to written or printed advertising material accompanying or made part of the application”. [Cal Ins Code 790.03]

If the scope of loss, repair or replacement estimates prepared by the insurer seems unreasonably low, you have the right to get an independent reconstruction/repair estimate and submit it to the insurance company. What happens next? Your insurer can 1) pay the difference between their estimate and yours; 2) at your request, recommend a contractor who can rebuild/repair your fence with the same materials and workmanship to return it to a “pre-loss condition” for the insurance company’s price, or 3) the insurer can “reasonably adjust” your contractor’s estimate. [Cal Code of Regs 2695.9] Carriers typically require a signed contract then to release any depreciation.

As for the depreciation, according to CA Fair Claims Settlement Practices Regulation Section 2695.9 (a) (1) When a loss requires repair or replacement of an item or part, any consequential physical damage incurred in making the repair or replacement not otherwise excluded by the policy shall be included in the loss. The insured shall not have to pay for depreciation nor any other cost except for the applicable deductible. And (f) (1) states: (1) Under a policy, subject to California Insurance Code Section 2071, where the insurer is required to pay the expense of repairing, rebuilding or replacing the property destroyed or damaged with other of like kind and quality, the measure of recovery is determined by the actual cash value of the damaged or destroyed property, as set forth in California Insurance Code Section 2051. Except for the intrinsic labor costs that are included in the cost of manufactured materials or goods, the expense of labor necessary to repair, rebuild or replace covered property is not a component of physical depreciation and shall not be subject to depreciation or betterment.

Under the State of Emergency, I have not located a bulletin in which you referred to no depreciation estimates. As for the Homeowner policies, there is a Dwelling Limit, and a separate limit for the Other Structures. You noted you have $75,000.00 for extended policy (Other Structures). Once that $75k is exhausted, the only other ‘bucket’ that may be available for you (depending on your policy) would be 5% Additional Debris Removal. You may want to check your Declarations page to determine if your policy includes this.

Since there is a potential for a landslide, if you take any preventive measures to protect your property, be sure to retain all of your receipts. However, you may want to review your policy (under Section 1 – Losses Not Insured) as landslide is not covered in most policies. Insurance companies do not pay your full policy limit if a state of emergency has been declared. Their payment solely depends on the estimate they prepare for any covered damages.

Stay safe!