What Do YOU Expect? Forum Index What Do YOU Expect?

 

 FAQFAQ   SearchSearch   MemberlistMemberlist   UsergroupsUsergroups   RegisterRegister 
 ProfileProfile   Log in to check your private messagesLog in to check your private messages   Log inLog in 
It's the content that matters...inside out



TRUST in YOU!
Love being set
© 2013-2015 APB


ACV on Fire loss to building - Claim Adjusting

 
Post new topic   Reply to topic    What Do YOU Expect? Forum Index -> Disaster Prepared/Aftermath
View previous topic :: View next topic  
Author Message
ScottyR



Joined: 13 Jun 2005
Posts: 5

PostPosted: Mon Jun 13, 2005 1:53 am    Post subject: ACV on Fire loss to building - Claim Adjusting Reply with quote

Hello.... I purchased the Policy Ensurance in the PDF format and have read through most of it. I still have a few questions, unfortunately math was never a strong point for me Sad I recently had a fire on a replacement policy with an 80% co-insurance. The total replacement for the bldg. was 1mil but the policy coverage was for $491k. It was a 95 year old bldg. and was purchased for $79,000 (it was a good deal). The insurance adjuster advised the bldg. was a total loss and it was demolished. Is there an industry standard on depreciating a building? What do you think I could expect the adjuster to return with in his adjustment?

Using the advice in the book I am trying to be as prepared as I can Confused
Back to top
View user's profile Send private message
tonyb



Joined: 04 Jan 2004
Posts: 17
Location: Montgomery, PA

PostPosted: Mon Jun 13, 2005 4:02 pm    Post subject: Reply with quote

It is anyone's guess what numbers the company adjuster will use as a basis in attempts to settle your claim. While waiting for the company adjuster to calculate your loss and claim why not put together figures for your loss and claim that are most favorable to you? In that way your figures are the ones at issue rather than those of the company adjuster, which for him to withdraw may require loss of face. If the insurance company determines that you carried too little insurance and attempts to impose a penalty; remember, although you carry the burden of proof, by proving adequate insurance you may eliminate the penalty. If, for example the problem involves a building structure, shop for a replacement cost estimate that is to your advantage much the same as insurance companies shop for repair estimates. You may locate a licensed building contractor who will establish that your insurance was adequate when compared to the contractor's building structure replacement estimate. Replacement estimates are not to be confused with repair estimates.

Coinsurance means you either carry the right amount of insurance compared to the property value or you pay for part of your loss. The greater the difference of the overall value of the property compared to a lesser amount of insurance carried, the greater the penalty.

The following formula determines if coinsurance penalties may apply:

Amount of insurance carried
--------------------------------- x the amount of loss = payment
Amount of insurance required

Example
$20,000 policy limit
$20,000 loss
$50,000 Actual Cash Value of building
$20,000 (insurance carried with an 80% coinsurance clause)
$40,000 (insurance required 80% x $50,000)

This example is computed as follows:
$20,000 (insurance carried with an 80% coinsurance clause)
---------
$40,000 (insurance required 80% x $50,000)
x $20,000 amt. of loss = $10,000 payment to policyholder

Under the circumstances of the example shown, the policyholder was covered for $20,000 and $20,000 is the amount of loss, but the policyholder is only paid $10,000 because of not carrying the right amount of insurance compared to the overall value of the property insured. You can see how important it is for the policyholder to establish the amount of loss and the Actual Cash Value of the property. Remember, Actual Cash Value is the basis for the penalty and values are matters of opinion that almost always vary. Market value may also be a factor to determine actual cash value. You can shop for opinions that support your own opinion for value of your property and for the amount of loss. The only fixed amounts in the equation are the coinsurance percentage requirement and the policy limit; all other factors are subject to adjustment.

Your informed opinion is very important. You are truly an equal in the transaction--equal in weight of opinion and equal in authority to determine and adjust your loss. If all else fails you have authority to file your formal claim. You are an adjuster!

Many jurisdictions prohibit the use of coinsurance clauses altogether: New York Underwriters Insurance Co. v. Shanks (Tex Civ App) 78 SW 2d 1026, writ ref.; Hartford Fire Insurance Co. v. Henderson Brewing Co., 168 KY 715, 182 SW 852. Commercial Union Assur. Co. v. Preston, 115 Tex 351, 282 SW 563.

If the 80% insurance requirement relates to the replacement cost coverage this reference may be of some help:

The court held that the replacement cost provision that deducts part of the amount of the claim when the policyholder has not maintained the minimum amount of required insurance, was considered a form of coinsurance. For this reason the court found the replacement cost provision void: Surratt v. Grain Dealers Mutual Insurance Co., 328 S.E. 2d 16 N.C. App., 1985.


Last edited by tonyb on Wed Jul 20, 2005 12:58 pm; edited 2 times in total
Back to top
View user's profile Send private message Visit poster's website
ScottyR



Joined: 13 Jun 2005
Posts: 5

PostPosted: Mon Jun 13, 2005 5:49 pm    Post subject: Reply with quote

Thanks for the reply Tony!

I understand the penalty and I am working on a replacement cost estimate as we speak. I have taken my property (which is a small rental complex) and averaged out the amount of income it would have generated over a 20 year period in which I expected to own it. This is what I would anticipate the ACV would be, is this a justifiable position? In my estimates the ACV would exceed the policy amount by a large sum I take this to be a good for negotiating or is it bad?

The building was in good shape ( no structural problems) and although it was almost a hundred years old it would most definitely stand for another 20 years. So I don't know what a deprieciable value would be on a bldg. this age since real estate normally increases in value. Other than deducting estimated maintenance cost per year this is the only deduction I can invision.

From reading the book I get that there are almost no or few rules when it comes to negotiating the final adjustment. I guess what I need to know is if I am on the right track for negotiating or am I not even in the station?

Thanks
Back to top
View user's profile Send private message
tonyb



Joined: 04 Jan 2004
Posts: 17
Location: Montgomery, PA

PostPosted: Mon Jun 13, 2005 7:14 pm    Post subject: Reply with quote

I am not an attorney and cannot advise you what to do. I can say that the example given in this message string illustrates when ACV exceeds the policy limit and the policyholder recovery is 50% of the loss. 80% co-insurance requires insurance in an amount of at least 80% of ACV or suffer a penalty. References and factors that support your argument for ACV are important in the adjusting process. Please see http://www.disasterprepared.net/adjust.html for more adjustment help. Best of luck.
Back to top
View user's profile Send private message Visit poster's website
ScottyR



Joined: 13 Jun 2005
Posts: 5

PostPosted: Mon Jun 13, 2005 8:05 pm    Post subject: Reply with quote

Quote:
Knowledge is leverage. The more you know, the more you have adjusting power. The real trick in adjusting is to get a good result quickly as possible, with little trouble as possible. It is the continued fate of unknowing, unprepared policyholders to deal ineffectively. Their lack of ability, I am sure, is due in part to attitude. However, lack of information and understanding are the real culprits. It is difficult to imagine doing something in an area of which you know little or nothing, no matter how simple the task. This scenario has repeated itself down through the ages.


Thanks for the response Tony but I guess I am looking for definites where there may be little. This is what I am looking for if anyone surfs through here knowing a good formula to calculate Actual Cash Value for a total loss of a building please let me know.

thanks
Back to top
View user's profile Send private message
tonyb



Joined: 04 Jan 2004
Posts: 17
Location: Montgomery, PA

PostPosted: Tue Jun 14, 2005 11:25 am    Post subject: Reply with quote

You are looking for something that does not exist. Much the same as when buyer and seller set out to agree on the sale of property there are no hard and fast rules for agreement on value. Courts have held ACV to mean replacement less depreciation (value that remains), market value and many other arguments and factors. It is your option to gather those factors most favorable to determine ACV as a base for your position--the starting point for your adjusting process. See http://www.disasterprepared.net/adjust.html
Back to top
View user's profile Send private message Visit poster's website
ScottyR



Joined: 13 Jun 2005
Posts: 5

PostPosted: Tue Jun 14, 2005 2:00 pm    Post subject: Reply with quote

Unfortunately or fortunately that's what I am finding I may have to contact an appraiser for this kind of work. Thanks for your advice Tony.
Back to top
View user's profile Send private message
ScottyR



Joined: 13 Jun 2005
Posts: 5

PostPosted: Fri Jun 24, 2005 6:19 am    Post subject: Reply with quote

Just an update - I have settled with my insurance company they were very fair and I didn't have to fight for anything. They gave me all of my policy limits with no penalty for co-insurance. FYI - it was [blank] Ins. I've had them for auto for years and they have always been fair there as well. Thanks for all the time and advice.
Back to top
View user's profile Send private message
tonyb



Joined: 04 Jan 2004
Posts: 17
Location: Montgomery, PA

PostPosted: Thu Jul 14, 2005 7:44 am    Post subject: Reply with quote
It is always a good ending to a story when the interest of the policyholder has been served without having to horse trade or "fight." However, much rides on an individual company adjuster's aspirations and temperament for that to be something on which to rely. There is no consistent alternative for actually knowing what to ask for and expect before negotiations begin. The name of your insurance company has been removed so as not to give the impression that any one insurance company should be blindly entrusted with policyholder authority for filing a claim, notwithstanding how claim business is usually conducted.

How to know what to expect: http://www.disasterprepared.net/deserve.html



Policyholder Ready Toolbox
© 2013-2017 APB

Help on the way: this content is local to your area in that it affects virtually everyone in your area, indirectly or directly: property insurance policyholders. When the next news stories run having to do with a local disaster such as a hurricane, earthquake, flood, tornado, fire, etc., perhaps think of those disaster survivors and to what extent you may have helped in their preparedness and recovery. Thank you for any help you give.

Share

Back to top
View user's profile Send private message Visit poster's website
Display posts from previous:   
Post new topic   Reply to topic    What Do YOU Expect? Forum Index -> Disaster Prepared/Aftermath All times are GMT
Page 1 of 1

 
Jump to:  
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot vote in polls in this forum

Go to Administration Panel


Powered by phpBB © 2001, 2002 phpBB Group