2020 ca wildfires...•the insurance company’s customer service telephone number for underwriting,...

2020 CA Wildfires

How to Read and Understand Your Homeowners Insurance Policy

September 24, 2020Virtual Workshop/Webinarwww.uphelp.org/2020wildfires

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2020 CA Wildfires

How to Read and Understand Your Homeowners Insurance Policy

September 24, 2020Virtual Workshop/Webinarwww.uphelp.org/2020wildfires

Emily Rogan

• Senior Program Officer, United Policyholders

• 12+ years experience in disaster recovery

• Board Member, NorCal VOAD

• Board Member, San Francisco VOAD

• Former Board Member, CDI Curriculum Board

• NERT Volunteer

Housekeeping• Welcome• We are recording this educational webinar• Questions:

– Use Q&A feature for clarification– For Questions UP Roadmap to Recovery

Q&A Wednesday, September 30th at 5:30pmRegister at: www.uphelp.org/webinar_sept30

Copyright 2020. United Policyholders. All rights reserved.

About United Policyholders• 501(c)3 not-for-profit charitable organization

• A voice and an information resource for consumers in all 50 states

• A 29+ year track-record and subject matter expertise in insurance and disaster recovery

• Not for profit…not for sale

• Funded by donations and grants

• A volunteer corps with personal and/or professional expertise in disaster recovery and insurance


Our Three Programs

• Roadmap to RecoveryTM

– Guidance on maximizing insurance funds, making decisions and getting back home after a catastrophic loss

• Roadmap to Preparedness– Helping households and communities reduce risk and be

resilient to disasters and adversity

• Advocacy and Action– Fighting for insurance consumer rights and protections


Team UP

• Professional staff• Government and nonprofit partners• Volunteers

– Previous catastrophic loss survivors– Consumer-oriented professionals

• Lawyers• Claim Adjusters• Tax and Financial Planning experts• Construction and real Estate professionals


THANK YOUFUNDERS AND PARTNERS

The Fine Print• This workshop is intended to be general

guidance only, not legal advice.• If you have a specific legal question, we

recommend you consult an experienced attorney.

• We do not endorse or warrant any of the sponsors listed at www.uphelp.org or speakers at our workshops.


http://www.uphelp.org/

Today’s Topics


How to Read and Understand Your Policy:

How to read your insurance policy

Determining all available benefits

Understanding lingo and claim rules

Depreciation, code upgrades, extended benefits

Best Practices

Get it in WRITING!

If not, put it in writing, back to them confirming your understanding.

Keep it professional.

Be concise and to the point.

Bold or bullet point your requests.

Use proper grammar and punctuation.

Promptly respond to letters and reasonable requests.

Avoid venting frustrations and emotions to your adjuster.Copyright 2020. United Policyholders.

All rights reserved.

Start a Claim Diary• Your claim diary will help you stay organized

and keep moving forward.• It is very likely that the first adjuster assigned to

your claim will be replaced and you’ll be dealing with others over time.

• Creating a written record prevents delays and frustration and is a paper trail of how the insurer is handling your claim.


Speak “UP”• Present your requests clearly and in writing• Explain what you need, when you need it, and

why you are entitled to it• Keep a Claim Diary

– Take notes on who you talked to, the number you called, date and time, what was said. Keep all of your paperwork organized and together

• Use your “working copy” of the policy– “Can you show me where it says that in my policy?”


Sandra Watts• Project Coordinator and Instructor,

Roadmap to Recovery

• 30+ years experience in Insurance claims and claims management

• Appointed Member, CA DOI Curriculum Board

• IICRC Certified Fire & Smoke and Water Restoration Technician (FSRT and WRT)

• CPIA - Certified Property Insurance Appraiser

• CPIU - Certified Property Insurance Umpire


WHERE TO START? Request policy in writing - ask for a “certified” copy to be

sure it is both current and correct However, your insurer is only legally required to provide

a ”complete and accurate” copy, so accept if they send. Then CHECK IT! We are going to show you how.

Modify UP Sample letter to request your policy (Law: insurer has 30 days to provide) CDI can help if you have issues.

Make a working copy so you can highlight and write notes .


UP Resources

• Sample Letter-Requesting a Copy of Your Insurance Policy

Uphelp.org/samples

• A Simplified Guide to Your Insurance Policy


Mobile/Manufactured Homes

• Similar language as HO policies

• Use the same method to determine coverage

• Generally have the same 4 “buckets” of coverage (A, B, C, D)

• Valuation of damaged or destroyed home is often difficult (RC versus ACV)

• Sometimes issues over title to home


Renter’s Policies• Very similar language to HO policies• Do NOT cover the structure, or exterior, of your

home• Obligation to clean and repair the structure is the

landlord’s responsibility• Coordinate with them to have building cleaned

first, then your contents, or hire same remediation firm to do at the same time.

• Remind your adjuster that the time to repair the structure is out of your control – you need ALE!


A “complete copy” has:


• Declarations Page* – showing the name of the insured, location of property, effective date, all coverage forms and limits in force for that time

• CA Residential Property Insurance Disclosure • CA Residential Property Bill of Rights• Policy form*• All Endorsements* attached (also called “riders”)• Other “Notice/compliance” pages

(*These also apply to Renter’s & Manufactured Home Policies)

DECLARATIONS• The “key” to all your insurance payments• Not all declarations look the same• They should all contain:

– Name of Insured– Location of insured property– Effective date- also called policy period– Major coverages and their limits of liability– Policy forms and endorsement forms– Deductibles (or deductibles)– Mortgagee information


Do I have ERC & Code Upgrade?


YES

MAYBE

NO IDEA?!

CA Residential Property Insurance Bill of Rights


A consumer is entitled to receive information regarding residential property insurance. The following is a limited overview of information that your insurance company can provide:

•The insurance company’s customer service telephone number forunderwriting, rating, and claims inquiries.

•A written explanation for any cancellation or nonrenewal of your policy.

•A copy of the insurance policy.

•An explanation of how your policy limits were established.

•In the event of a claim, an itemized, written scope of loss report preparedby the insurer or its adjuster within a reasonable time period.

•In the event of a claim, a copy of the Unfair Practices Act and, if requested,a copy of the Fair Claims Settlement Practices Regulations.

•In the event of a claim, notification of a consumer’s rights with respect tothe appraisal process for resolving claims disputes.

•An offer of coverage and premium quote for earthquake coverage, if eligible.

A consumer is also entitled to select a licensed contractor or vendor to repair, replace, or rebuild damaged property covered by the insurance policy.

Dec Page plus policy wording = your max available benefits


ANATOMY OF A

POLICY


Definitions

Coverages

Additional Coverages

Losses Insured

Losses Not Insured (Exclusions)

Loss Settlement Provisions

Conditions

DEFINITIONS• Tells us what certain words mean• If not otherwise defined, use the “common

meaning” usually found in dictionary• Some policies bold defined words• Some policies use “quotes” to identify • Some important terms: , “insured”,

“building structure” “actual cash value” and “property damage.”


Definitions- Examples


State Farm

CSAA

Nationwide

COVERAGES• Tells us what specifically is covered.• Very broad language• The letters (A, B, C, D) differ by company• Usually consists of:

– COVERAGE A – Dwelling – COVERAGE B – Dwelling Extension– COVERAGE C – Personal Property– COVERAGE D – Loss of Use (ALE)(Renter’s policies the same without Coverage A included)


COVERAGE A- Examples


In general, covers the main house, and most pay for construction materials on the premises. Some cover other attached structures, and some do not.

COVERAGE B- Other Structures• Also called “Dwelling Extension”• Usually limited to 10% of Coverage A limit• Some companies let you increase this $• What qualifies varies quite a bit by

company• Some items that are “other structures”

under one policy, might be landscaping under another policy.


Coverage B - Examples


Remember the definitions? Here’s when you need them! (Farmer’s Smart HO)

Combining Coverages in CA - NEW LAW!• 10103.7. In the event of a covered loss relating to a state of emergency,

as defined in Section 8558 of the Government Code, an insured under a residential property insurance policy shall be permitted to combine payments for claims for losses up to the policy limits for the primary dwelling and other structures, for any of the covered expenses reasonably necessary to rebuild or replace the damaged or destroyed dwelling, if the policy limits for coverage to rebuild or replace the primary dwelling are insufficient. Any claims payments for losses pursuant to this subdivision for which replacement cost coverage is applicable shall be for the full replacement value of the loss without requiring actual replacement of the other structures or contents. Claims payments for other structures in excess of the amount applied towards the necessary cost to rebuild or replace the damaged or destroyed dwelling shall be paid according to the terms of the policy.

• (Added by Stats. 2018, Ch. 618, Sec. 3. (SB 894) Effective January 1, 2019.)


Coverage C – Contents

• Covers personal property owned by the insured while it is anywhere in the world

• In general, if you imagine taking the roof off and shaking your house, what falls out is personal property.

• Check your policy for any “off premises” coverage and/or limits

• May cover guest’s property if destroyed at your home

• Many items subject to specific coverage limitsCopyright 2020. United Policyholders.


Coverage C – Example


Contents – Special LimitsSome common contents limits include:• Money - $150 - $500 • Securities - $1,000• Business Property - $500- $2,500• Watercraft - $1,000• Trailers - $1,000• Computers/Electronic Equipment - $5,000Other items (jewelry, firearms) have special theft limits that don’t apply

to fire.Copyright 2020. United Policyholders.


Contents – Property Not Covered • Items that are specifically insured

elsewhere (i.e. jewelry, art w/own coverage)

• Animals, birds, and fish • Property of tenants, roomers or boarders• Motor vehicles (exceptions for certain

vehicles not registered for use on roads and/or for handicapped assistance.)

• Recreational vehiclesCopyright 2020. United Policyholders.


COVERAGE D – ALE/LOSS OF USE• Coverage and limits vary by company• Check your declarations page for limits:

– “Actual Loss Sustained”– Money limit– Time limit– Money & time limit

• Check the policy for coverages:• Additional Living Expenses• Fair Rental Value• Prohibited Use / Civil Authority


Coverage D – Loss of Use

Note: California law provides that for a Governor’s declared disaster your insurer must give you at least 36 months to use yourALE benefits. It does not increase the coverage limit.

Declarations + Policy = Coverage

Copyright 2020 United Policyholders All Rights Reserved

STATE FARM SAMPLE

-Actual Loss Sustained(means no $ limit!)

- To maintain YOUR standard of living.

- Standard Policy says 24 months. State Law and ENDORSEMENT extend this to 36 mo.

Farmer’s Sample Language


Farmer’s Sells Several Policies, so review YOURS!

This one has both a money and a time limit. AND the damage must be to the dwelling, not off site.

ALE OR Fair Rental Value

CSAA**

YOUR OPTION

**


ALE vs. FAIR

RENTAL VALUE

ALE – Actual additional costs incurred to maintain your standard of living

FRV – A negotiated amount, based upon the fair rental value of the home you lost

Check your policy to see which applies

If you don’t have FRV, you can always ASK for it – the worst is “no”

BREAK DOWN ALE LANGUAGE


(Some policies say that it has to be YOUR property damaged – others don’t!)

If this is met, you will be owed ALE under most policies.

To become uninhabitable (unfit to live in)

Causes the residence premises (your house)

When a Loss Insured (FIRE!)

WHAT ARE YOU OWED?• INCREASED COST - over and above what you NORMALLY spend.• EXAMPLES:

– If you own your home, you must continue to pay your mortgage. Thus, rent on your temporary home is an increased cost.

– If you usually rent, and pay $1,500 per month, but now pay $2,000, the additional $500 is an increased cost

– If your monthly food costs are $500, and now you have to eat out, and your costs are $1,000, then the additional $500 is an increased cost.

– If your utility bill was $150/month, but is now included with your rent, then your insurer might deduct that since you are saving

– Your insurer will ask you to provide an estimate of the amounts you spend monthly on certain items.


WHAT ARE YOU OWED?

• MAINTAIN YOUR STANDARD OF LIVING – you are entitled under the terms of your policy to live at the same standard as before the loss.

• EXAMPLES:– Single family home, condominium or townhouse, same number

of bedrooms, bathrooms, amenities, air conditioning, even a swimming pool, if you had one before!

– Same standard type of neighborhood – i.e. gated community, rural with some land, high rise, etc.

• HOW LONG?– shortest time to repair, replace or for your household to settle elsewhere. CA state law gives 24 months, with ability to have 36 months, but it is NOT automatic.


WHAT QUALIFIES?• Rent for temporary housing• Renters insurance policy • Extra miles• New Account “Set up” fees at temp. housing• Photo copies and mailing expenses related to

claim• Moving costs• Pet boarding costs• Ask for their list


ALE – Be Creative• ALE creativity comes into play when you are concerned

that your dollar limit won’t last the entire length of you• Beware that if you have an “Actual Loss Incurred” policy

(no $ limit) negotiations can leave you with LESS!• Ask for FRV versus “as incurred”• Negotiate a lump sum• 5th wheel or recreational vehicle• Tiny home• Other home you own • If you don’t ask, you won’t get. The worst that can

happen is they say no.


ADDITIONAL COVERAGES


Debris removal

Trees/Plants/Shrubs

Temporary Repairs

Refrigerated Products

DEBRIS REMOVAL• Commonly adds an additional 5% to each coverage, once the

underlying limit is exhausted (some include in limit, some higher %)• Debris removal costs are included in the estimate, until limit

reached, then it is applied• Can use private contractor, or consolidated FEMA program, at your

choice• Make sure private firm can comply with County requirements for

removal & disposal of toxic substances• Additional 5% for contents debris is often overlooked• Usually does not include any coverage for Trees/Shrubs/Plants

(unless they hit the house)• Photograph debris before it gets taken away, but be safe if sifting• Try to target still-recognizable items in photos• Save the photos where you’ll be able to find them later


DEBRIS REMOVAL


SAMPLE LANGUAGE:State Farm and Farmers

TREES, PLANTS

& SHRUBS


Covers specified landscaping damaged or destroyed

Usually only covers specific perils – i.e. fire

Generally adds an additional 5% of coverage

Includes debris removal for trees

Cross reference with Debris Cov

TREES, PLANTS & SHRUBS• EXAMPLES – Liberty Mutual & Farmers


Refrigerated Products/Food Spoilage


If your adjuster is limiting your food loss claims based upon one of these – remind him that your loss was caused by FIRE, not by power interruption! CA is a “predominant cause” state- means they must look at whether the “most important” cause is covered.

LOSSES INSURED• Identifies what types of losses are covered• Two major methods:

1) “All Risk” or “Broad Form”All accidental, direct losses are covered, unless

specifically excluded2) “Named Peril” Lists specific “events” that are covered. Usually 16. different perilsExclusions still apply

Cov. A, B & C could use different methods- check!Copyright 2020. United Policyholders.


Losses Insured – All Risk Examples


Losses Insured – Named Peril Example


1. Fire or lightning2. Windstorm or hail3. Explosion4. Riot or civil commotion5. Aircraft6. Vehicles7. Smoke8. Vandalism & malicious mischief9. Theft10. Falling Objects11. Weight of ice, snow or sleet12. Accidental discharge of

water/steam13. Sudden burst of steam boiler14. Freezing15. Sudden and accidental ‘power

surge”16. Volcanic eruption

LOSSES NOT INSURED = EXCLUSIONS

• Amazingly complicated to analyze and apply in many cases- try not to get in too deep!

• Note that many policies exclude things (like code upgrades) in order to add back limited coverage somewhere else

• CA is a “predominant cause” (most important cause) state, so if that cause is covered then generally all ensuing losses that arise from it are covered – FIRE!


Exclusion - Example


LOSS SETTLEMENT PROVISIONS• Determines how your loss is to be settled• Major points are:

– Replacement Cost– Actual Cash Value

• Loss Settlement Provisions are OFTEN modified by Endorsements, so always check!

• Most policies contain language that allow reimbursement for amounts actually and necessarily spent for covered repairs, up to the policy limits.


Example – Actual Cash Value


If you see this, LOOK for an endorsement that adds replacement cost back in!Certain policies are only ACV, especially manufactured home policies.

ACV with RC paid when repairs completed –Most common


POLICY ENDORSEMENTS


When listed, become part of your policy

VERY important to have and read

Modify and/or clarify provisions

Can add or remove coverages

Can limit or expand coverages

Sometimes conflict with provisions

Ask for clarification, if it doesn’t make sense

Example – Replacement Cost


State Farm FE-3422 2010

Same ACV Policy + Endorsement


EXTENDED REPLACEMENT COVERAGE• Most HO policies sold today have “extended

replacement” provisions• These provide additional funds to replace your home

when your Coverage A limits are inadequate to repair/replace your dwelling.

• Most language is included in the Loss Settlement section, or are added by Endorsement

• The naming varies, look for “extended” “replacement”• Limits vary from 10% to 200% • Most policies apply the extended benefits only to

Coverage A.• Some policies apply ERC to A, B and C.


ERC Examples


CODE UPGRADE COVERAGE


• Most HO Policies, but not all have some (usually 10%) coverage for CODE UPGRADES

• Some add it as an extra limit, some do not• You can purchase more (20%-50% or more)– more

important for an older home that has not been updated• Pays for upgrades to your home that you are required to

add, based upon a building ordinance or law, to bring THE HOME YOU LOST up to current codes

• Check endorsements, as policy is often modified• In CA – Insurance Code 2051.5 allows you to use this

amount to rebuild elsewhere or buy a replacement home, even if the policy says otherwise.

Code Upgrade/Ordinance & Law


Look for words “additional amount of insurance”

Sample Endorsement- Code


Sample Endorsement - ERC


Sample Endorsement


INSURANCE CODE 2051.5• Effective September 21, 2018• Sets “measure of indemnity” (what your insurer

owes you) as the cost to repair or replace the thing you lost, up to policy limits

• Expands time to collect RC to 36 months for declared emergencies

• Allows for ALE to 36 months for emergencies• Allows you to use ALL of your insurance

coverages to rebuild elsewhere or to buy a replacement home


Dwelling Coverage

These are the “big ticket” items in your policy

Do the math to know your limits! – Coverage A - limits for main

dwelling– Extended Replacement?

(commonly 25%, 50% or 100%)– Debris Removal - Usually 5%

PER coverage– Code Upgrade Coverage

(Ordinance & Law)– Trees, Shrubs and Plants -

Usually 5%– Inflation Coverage to increase

all?


INFLATION COVERAGE


Inflation protection is not included in every policy, and when it is, is applied differently.

DO THE MATH! EXAMPLECoverage A - $500,000Inflation adjustment is 3% per year Increases limits by $15,000/ year, or $41.09/dayIf loss occurs after 180 days ($41.09 x 180) Increase is $7,397.26Adjusted Coverage A is $507,397

Extended Replacement Coverage = 25%Coverage A $507,397 x 25 % = $126,849TOTAL DWELLING Coverage Available (A + ERC) = $634,246

Debris removal is 5% of Coverage A*Coverage A is $507,397 x 5% = $25,369.85 Debris may (or may not) apply separately to each coverage – A, B, C

*To trigger the additional 5%, the base limit must be exhausted


Make a chart of your max limits


Claim Handling

Standards

California Fair Claims Settlement Practices Act

– 15 days to respond to communications• Email, letter, phone call

– 40 days to pay or deny claim– If unable to make decision

must send letter• What they need to make a

decision• How long they need to

make the decision• Send letter every 30 days


Voluntary Claim Handling Reforms• If your adjuster is from out of State, they

may not know about CA laws, regulations and bulletins

• Ask if they have been trained in CA Fair Claims Settlement Practices Regulations

• Ask for an advance (in writing):- Advance of 25% of Contents Coverage- 4 months advance of Additional Living

Expense Coverage


The flow of insurance

funds


Advances

ACV payments when values are set

RCV payments upon proof of expenditures, replacement, repairs completed

CONSIDER:• Opening a separate bank account• Keep track insurance funds collected and

paid out• What “bucket” of coverage does each

check come out of?• Example of Insurance Accounting

Spreadsheet and ALE Drawdown Spreadsheet at: www.uphelp.org/samples


Best Practices

Get it in WRITING!

If not, put it in writing, back to them confirming your understanding.

Keep it professional.

Be concise and to the point.

Bold or bullet point your requests.

Use proper grammar and punctuation.

Promptly respond to letters and reasonable requests.

Avoid venting frustrations and emotions to your adjuster.Copyright 2020. United Policyholders.


Stay Connected to Other Disaster Survivors

• Great source of information about:– Insurance– Rebuilding– Negotiation and Financial strategies– Referrals and warnings re: professionals

• Important source of emotional support– No one else understands your challenges and

emotions like another survivor


Here for the long haul• UP is here to offer guidance to help you

put one foot in front of the other on YOUR path to recovery– Common Obstacles addressed in Roadmap

to Recovery Program:• Underinsurance• Lowballing • Buy vs. Rebuild• Home Inventory


CALIFORNIA DEPARTMENT OF

INSURANCE

FOR FREE, PERSONAL ASSISTANCE WITH YOUR CLAIMS OR UNDERINSURANCE ISSUES

CALL US AT: 1 800 927 4357OR GO ONLINE: insurance.ca.gov

24/7 help on the web: www.uphelp.org/2020Wildfires

Claim Help for Disaster Survivorswww.uphelp.org/2020Wildfires

Links to pro-consumer Professional help: www.uphelp.org/findhelp

Sample Letters & Claim Formswww.uphelp.org/samples

“Survivor’s Speak” Tips from past disasterswww.uphelp.org/SurvivorsSpeak

Upcoming workshops and resources www.uphelp.org/2020wildfires

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Stay informed

Encourage friends to sign up:www.uphelp.org/signup

• To be added to our mailing list for notices of future events and updated guidance

• To request a copy of today’s Power Point/Recording, email [email protected]

http://www.uphelp.org/signup

THANK YOUFUNDERS AND PARTNERS

UPCOMING WEBINARS: www.uphelp.org/2020wildfires

Roadmap to Recovery Q&A – 2020 CA WildfiresSeptember 30th @ 5:30 p.m.

Roadmap to Recovery for RentersThursday, October 1st

Navigating your Partial Loss/Smoke Loss ClaimWednesday, October 7 @ 5:30 p.m.

Navigating the “Dwelling” Portion of Your ClaimThursday, October 8th

Thank you!www.uphelp.org/signup

• To be added to our mailing list for notices of future events and updated guidance

• To request a copy of today’s Power Point/Recording, email [email protected]

http://www.uphelp.org/signup

R2R Guidance and Tools

“The Little Yellow Book”

email: [email protected]


2020 ca wildfires...•the insurance company’s customer service telephone number for underwriting,...

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