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Homeowners’ Valuation Course Materials Copyright 2011© Stone | Rosenblatt | Cha

Homeowners’ Insurance Valuation: What Agents and Brokers Need to Know

A Three Hour Continuing Education Course moderated by Kristi Dean

STONE | ROSENBLATT | CHA Speakers: Karen Bever, Leslie Blozan, Mike Newfield and Gidon Vardi

May 24, 2011, 8:30-12:00 p.m. Pasadena, California

Provider Course Material Table of Contents

Syllabus ……………………………………………………………… 1 California Code of Regulations 2188.65 ...………………………………………………………. 42 2190.2 …………………………………………………………... 46 2190.3 …………………………………………………………… 48 2695.180 ………………………………………………………... 50 2695.182 ………………………………………………………... 52 2695.183 ………………………………………………………... 53 Insurance Codes 1749.31 …………………………………………………............. 30 2051.5 ………............................................................................ 31 2057 .................................................................................... 33 2070 ....................................................................................... 34 10081 ..................................................................................... 35 10090 ..................................................................................... 36 10101 …………………………………………………………….. 37 10102 …………………………………………………………….. 38 Court Cases Desai v Farmers Ins. Exchange (1996) 47 Cal.App.4th 1110….. 59 Everett v State Farm (2008) 162 Cal.App.4th 649………………... 68 Fitzpatrick v Hayes (1997) 57 Cal.App.4th 916…………………… 87 Free v Republic (1992) 8 Cal.App.4th 1726……………………….. 98 Jones v Grewe (1987) 189 Cal.App.3………………………………. 103


Miscellaneous NAHB/Bank of America Study of Life Expectancy ...................... 111


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SYLLABUS

I. INTRODUCTION

A. The Catalysts for Concerns over Underinsurance

1. Protection for the largest investment made by most homeowners

2. Protection for mortgagors

3. The impact of recent catastrophes

B. AB 2022, codified into California Code of Regulations sections 2188.65, 2695.180, 2695.181, 2695.182, 2695.183, and amended 2190.2 and 2190.3.

1. Revision of Residential Property Disclosure Form

2. Residential Property Insurance Bill of Rights

3. Mandatory training for agents/brokers

4. Understanding, enlightenment and documentation regarding replacement cost estimates

II. RESPONSIBILITIES OF AGENTS AND INSURERS BEFORE AB 2022

A. The General Rule

1. Fitzpatrick v. Hayes

B. The Exceptions to the General Rule

1. Jones v. Grewe

2. Free v. Republic

3. Desai v. Farmers

4. Everett v. State Farm

III. DIFFERENCES BETWEEN HOMEOWNERS' AND DWELLING PROPERTY POLICIES

A. Dwelling Coverage

1. Considered a residential property of up to four units, whether occupied by the insured or not


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2. Used more frequently for landlord (tenant) properties and homes that don’t qualify for “standard” or “preferred” homeowners policies, e.g., older homes, those with a market value below replacement cost, dwellings under construction, vacation homes, rentals, permanent mobile homes, offices, studios, studio facilities

B. Homeowner's policy (HO policy)

1. Owner-occupied

2. Max of two family units

3. Inspections for heating, plumbing, electrical systems and condition

4. Owner has to be checked for prior claims

5. Residential property, not used for commercial properties

C. Differences in the property that may necessitate differences in coverage or coverage levels

1. Condition is poor

2. Age of home may require rebuild

3. Permits were not pulled for remodels

4. Vacant property

5. Rental property

6. Up to five roomers or boarders occupy property

7. Insured only requires dwelling coverage

IV. BASIC CONCEPTS OF PROPERTY VALUATIONS

A. Loss Settlement Provisions

1. What they look like

2. How they apply

o Determines whether insured gets full replacement cost for the loss. If the amount is coverage is properly determined, insured gets the full replacement cost up to policy limits. If the cost is insufficient, the policy will typically provide that the insured will get a proportion of the replacement cost, or the actual cash value, whichever is greater.


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o Unlike commercial coinsurance, the HO policy has no penalty. If adequately insured, the homeowner will always get at a minimum, the full actual cash value, and at a maximum, the full replacement cost.

B. Actual Cash Value (“ACV”) v. Replacement Cost Value (“RCV”)

1. Actual Cash Value requires a reduction because of depreciation. Depreciation is the loss in value of a piece of property over time.

2. Replacement cost for the dwelling improvements vs. contents of home

3. California Insurance Code (“CIC”) §§ 2051, 2051.5 and 10102

4. Different Types of Structure

5. California Residential Property Disclosure

o July 1: new disclosure form

o Attention to description of “actual cash value” v. “guaranteed replacement cost”

o Removal of provision regarding insuring dwelling to full replacement cost

6. California Residential Property Insurance Bill of Rights

o Must accompany new disclosure effective July 1

o Eliminates first 16 lines of the current disclosure form

C. Depreciation (Holdback) for Claims and How it is Applied under a Homeowners' Insurance Policy (CIC § 2051.5)

1. Market Value

a. Not used as a loss valuation method: market value fluctuates by too many tangibles

b. Different structures may be valued the same via market value, but may require different replacement costs, such as costs to recreate “antique” construction techniques

2. Replacement cost less depreciation for age, wear and tear

D. Effect of Underinsurance on Settlement

1. Examples


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V. NECESSARY COMPONENTS OF A DWELLING STRUCTURE TO ESTIMATE REPLACEMENT COST

A. Shape of Outside Perimeter

1. Complex = expensive to rebuild

B. Type of Foundations

1. Slab on Grade

2. Pier and Beam

3. Basement or T-Shaped

C. Type of Frame

1. Modern Light Frame Construction

o Wood iron-clad

o Stucco on wood or plaster on combustible supports

o Aluminum or plastic siding over frame

2. Platform Framing

3. Balloon Framing

4. Post and Beam

D. Roofing Material and Type of Roof

1. Concrete Tile

2. Steel or Metal

3. Flat Roof

4. Slate Roof

5. Green Roofs

6. Solar Roofs

E. Siding Materials and Type of Siding

1. Stucco

2. Wood Clapboard


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3. Cedar Shingle

4. Composite Wood

5. Seamless Steel

6. Aluminum Siding

7. Vinyl Siding

8. Vinyl Coatings

9. Brick Veneer

10. Stone Veneer

11. Fiber Cement

F. Location of Property being Built

1. Housing Tracts v. Custom Homes

2. City, suburban, rural

3. Restricted community developments

4. Differ by state, counties

G. Whether the Structure is Located on a Slope

1. Access restricted?

2. Cases for sharing

H. Building Code Upgrades

1. Older homes require additional upgrades to meet current building codes.

2. Insurers must offer law and ordinance coverage, absent a written refusal

3. Retrofit of structures

I. Size of the Entire Structure and Square Footage

J. Appurtenant Structures Coverage and Values

1. Balconies

2. Attic


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3. Garage

o Attached garage

(i) Direct contact between frame and dwelling

(ii) Usage, function, build-out and finish

o Detached garage

(i) Accessory or appurtenant structure

(ii) Usage, function, build-out and finish

(iii) Utility hook-ups, electrical and plumbing

4. Other buildings? Occupied or rentals?

5. Fencing, masonry, landscaping, pools, decoration

K. Number of Stories and Nonstandard Interior Wall Heights

1. Low rise

2. Mid rise

3. High rise

4. Split levels

5. Subterranean

L. Materials, Types of Interior Features and Finishes

1. Heating and air conditioning system (furnaces, central or individual units, electrical wallboard heaters? Electric wall heaters?)

2. Walls (mirrors)?

3. Flooring (carpeting, wood floors)

4. Ceiling

5. Fireplaces

o Zero clearance?

o Forced air blowers?

o Upstairs and downstairs?


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6. Kitchen and baths (countertops, plumbing, fixtures, cabinets, appliances)

7. Soil condition: sand, rocky or clay?

8. Garage doors

M. Additional Costs:

1. Cost of demolition and debris removal

2. Architect's plans, engineering reports, and permits

3. Age of the structure or the year built

4. Costs associated with custom homes

VI. EFFECTS OF CATASTROPHIC EVENTS ON REPLACEMENT COST

A. Construction Labor, Building Supply, Fuel and Transportation Shortages

1. Catastrophic events overwhelm systems, including the amount of available skilled and unskilled labor

2. Cost of materials are affected by diminished production, demand, and distance from which goods and services must be brought to the affected areas

3. Cost of construction impacted by transportation delays due to damage to infrastructure

4. Building Code inspections affected by short staffing, untrained support

5. Debris removal can be extensive

6. Fuel shortages raising production and delivery costs, disrupting production and delivery of goods and creating the inability to use power tools or generators.

B. “Demand Surge”

1. Increased costs and rebuilding delays

2. Replacement cost estimates must not include a cost associated with “demand surge”.

3. Agents must inform applicants and policyholders that this cost has not been, and cannot be taken into account. (CCR 2695.183)

4. Agents can apprise customers that additional coverage may be obtained.


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VII. ENHANCEMENTS AND ENDORSEMENTS TO THE HOMEOWNERS/DWELLING POLICY AND IDENTIFICATION OF COVERAGES THAT HELP PROTECT AGAINST UNDERINSURANCE

A. HO Policy Overview

1. The below differences apply only to property and contents coverage; liability is the same.

2. The Standard Five

o Broad Form (HO 02): This form provides “broad form” or named perils coverage for both the dwelling and personal contents;

o Special Form (HO 03): This form provides “special form” or “open perils” coverage which insures all risk except for named exclusions on the dwelling and structures, and named peril coverage for personal property;

o Tenants Form (HO 04): This form provides “broad form” or named peril coverage for tenants and renters; no coverage for the dwelling;

o Comprehensive Form (HO 05): This form provides “special form” or “open perils” coverage which insures all risk coverage except for named exclusions on the dwelling, personal property, and other structures;

o Unit Owners Form (HO 06): This form provides “broad form” or named peril coverage for condominium owners;

3. The Not-So-Standard Form

o Modified Form (HO 08): This form provides ACV modified peril coverage for owner occupied dwellings which are not suitable for standard forms; they are typically risks which are older or higher risk. This is the only coverage in which both buildings and contents are protected against named perils with extended coverage perils and vandalism and malicious mischief coverage.

4. The Five Classifications of Coverage

o Coverage A - Dwelling: Value of dwelling, not land; typically has coinsurance clause that as long as the dwelling is insured to 80% of actual value, losses will be adjusted at replacement cost, up to policy limits;

o Coverage B - Other Structures: Coverage C - Personal Property: Reflects sublimits for theft, loss of particular classes of items;


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o Coverage D - Loss of Use/ALE: limits vary; should provide for any necessary increases in living expenses so that the household can maintain its standard of living, including moving expenses. It may also provide coverage for storage, cleaning, eating out, transportation costs, boarding care for animals. Might also provide fair rental value minus expenses.

o Additional Coverages: Vary by form, but can include reimbursement for reasonable repairs, tree and tree removal, credit card or identity theft, and collapse.

5. Exclusions: In a “special form” or open perils policy, specific exclusions will be stated in an “exclusions” section. Exclusions vary by form.

B. Review of Significant Property Enhancements and Endorsements to the Policy

1. Schedule Property Endorsements (agreed value)

2. Personal Property Replacement Cost (the least of the following: repair, replacement, or limits)

3. Personal Injury

4. Home Business Endorsement

C. Catastrophe Coverages

1. Earthquake

2. Flood

3. Hurricane/Tornado

4. Mold

5. Subsidence/Landslide

6. Catastrophe effects on rebuilding

o High demand for labor, resulting in shortages and increased labor costs.

o High demand for building materials, resulting in shortages and increased materials costs.

o Inability to obtain supplies and materials due to breakdown of delivery methods, fuel shortages, blocked access.

o Shortages of all types resulting in delays and increased costs.


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o Permit restrictions may dictate ability, method, cost and time to rebuild, causing delays and increased costs.

o Delays result in potential for increased costs due to inflation, shortages, and more man-hours consumed.

D. Types of Replacement Cost Coverage (CIC § 10102)

1. Basic Replacement Cost Coverage

o Intended to provide for cost to repair or replace the dwelling without a deduction for physical depreciation.

o Most policies pay only ACV until the repairs have begun or are completed

o Maximum amount limits specified in the policies

2. Extended Replacement Cost Coverage

o Extends the coverage above the dwelling limits up to a stated percentage or specified dollar amount (policy limit)

o Extended Replacement Cost is typically a percentage above the policy limits, usually 120-150%

o Subject to deductible and frequent requirement of actual repair or replacement to recover the extended costs.

3. Guaranteed Replacement Cost with Full Building Code Upgrades

o Covers the full cost to repair regardless of the limits shown on the policy declaration

o Broadest form of coverage available.

4. Guaranteed Replacement Cost with Limited or No Building Code Upgrades

5. Exclusions

o Beware of limitations or exclusions for cost of removal of debris and demolishing the remaining building

o May not include allowance for architectural or engineering fees

o May not include permits

o Mortgage payments while repairs are completed


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o General contractor’s overhead and profit

6. Misuses:

o The failure to insure the full value of the risk and relying on the "replacement cost" endorsement to make up the difference is inappropriate and harms the policyholder.

o Examples

E. Building Ordinance Coverage Requirements

1. What is included and excluded in Building Code Upgrade (Ordinance and Law) Coverage (CIC § 10102)

o Residential Property Insurance Disclosure Statement details as required by CIC § 10101

o Identification of coverages purchased

o Disclosure every other year upon renewal

o Guaranteed replacement cost for dwellings only if without limit or sub-limit

o Applicability to building codes, ordinances, standards or laws only if not imposing stricter standards on the property based upon level of insurance

o When disclosure required to mortgagor.

2. The various types and levels of replacement cost (CIC § 10102)

3. Ordinances particular to specific locations and risks

4. Awareness of limits and sub-limits

F. Appurtenant Structures

1. What is included?

2. What is excluded?

VIII. BASIC FIRE POLICIES

A. Real Property Forms

1. CIC 2070 requires that the form be standard, or substantially equivalent or more favorable to the insured than the standard form insurance policy.


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2. Basic format:

o Broad Form vs. Special Form

o Comprehensive Form vs. Modified Coverage Form

o Policy Declarations

o Policy Agreement (Insuring Clause)

o Conditions: things or issues that will suspend or restrict coverage, insureds’ obligations, such as reporting additional hazards, mitigating losses, reporting claims

o Policy Exclusions

o Policy Endorsements for Catastrophe

o Policy Endorsements for Valuation and Limits

o Policy Endorsements for Building Ordinance

o Policy Endorsements for Appurtenant Structures

o Policy Endorsements for Extended or Guaranteed Replacement Cost

B. Differences between ACV and RCV

1. Measure of ACV is determined as follows:

o If total loss, policy limit or fair market value of the structure, whichever is less;

o If partial loss to structure or contents, the amount it would cost the insured to repair, rebuild or replace the thing list or injured, less a fair and reasonable deduction for physical depreciation based upon its condition at the time of the injury or the policy limit, whichever is less. Deduction for physical depreciation shall apply only to components of a structure that are normally subject to repair and replacement during the useful life of that structure. (CIC 2051)

2. In a special form that requires RCV:

o The measure of indemnity is the amount that it will cost the insured to repair, rebuild or replace without a deduction for physical depreciation, or the policy limit, whichever is less.

o If the policy requires the insured to repair or replace the damaged property in order to collect the full replacement cost, the insurer shall pay


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the ACV until the damaged property is repaired or replaced. Then the insurer shall pay the difference between the ACV payment and the full replacement cost reasonably paid to replace the damaged property, up to the limits

o Insureds have 12 months to collect the full replacement cost; additional six months for good cause.

C. Exclusions and Limitations of Coverage

1. Building

o Certain components excluded such as foundations and levels below foundation

o Appurtenant structures unless listed in coverage extension

o Underground structures or equipment outside the foundation walls

o Irrigation and water reclamation systems

2. Decorative or artistic components without utilitarian purpose

3. All Risk v. Named Peril

4. Typical endorsements for pollution, mold, asbestos, war, nuclear

D. Extensions of Coverage for Items Otherwise Excluded

1. Other structures such as patios, fences, awnings and appurtenant structures

2. Non-dwelling property such as landscaping, fencing, antennas and satellite dishes

3. Equipment and utility service structures

4. Walkways, driveways

5. Bulkheads, piers, retaining walls

6. Pools, spas, etc.

E. Review of the California Standard Form Fire Policy (CIC § 2071)

1. Contents and language mandated by CIC § 2071

2. Required coverages for specific perils


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3. Required exclusions/perils not included

F. Review of the FAIR Plan Coverages (CIC § 10090)

1. Coverage available to insureds subjected to hazards beyond their control, in specially designated area

o When insurance not available through “normal channels”

o Coverage through association of insurers writing business in the state

2. Standard policy for structure and contents

o Insures fire, lighting, internal explosion can be added

o Extended coverage is optional: other structures, additional living expenses, ordinance or law, debris removal, landscaping

3. Fire and earthquake coverage available, but with restricted limits

4. May have larger than average co-insurance

G. Review of Earthquake Insurance Coverages (CIC § 10081 et seq) including coverage offered by the California Earthquake Authority (“CEA”)

1. EQ coverage offer required of carriers selling homeowners insurance in California or through California Earthquake Authority participation

2. Coverages offered

o Basic earthquake policy-homeowners, replacement cost

o Basic earthquake policy-renters (n/a)

o Basic earthquake policy-common interest development (for apartments, condos and similar shared ownership entities)

o Minimum 5%, up to 15% deductible.

3. Conditioned upon valid, existing fire insurance policy

4. Exclusions

a. No coverage for earthquake related flood or tsunami

b. non-utilitarian artwork and decorations

c. non-attached appurtenant structures


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d. Exclusions for non-dwelling structures and improvements

o Landscaping, pools, spas, fountains

o Antennas, satellite dishes

o Fences, patios, awnings

o Driveways, walkways, hardscape

o Exterior masonry veneers (this is not stucco)

e. Pollution exclusions

IX. TYPES OF BASIC BUILDING CONSTRUCTION

A. Tilt -Up/Concrete/Steel (Type I, Fire Resistive)

1. Building elements are noncombustible material, including roof

B. Concrete Walls/Combustible Roof (Type II, Non-Combustible)

1. Similar to Type I, but roof is combustible

C. Brick and Masonry (Type III, Ordinary)

1. Masonry bearing walls

2. Floors, structural framework and roof are made of combustible masonry

D. Masonry/Wood (Type IV, Heavy Timber)

1. Masonry walls, but interior wood consists of heavy timbers, not less than 8” thick in any dimension, wood girder not less than 6” thick

2. Floor and roof are plank board

3. No plaster walls and ceilings covering interior wood framework

E. Conventional Wood Frame (Type V, Combustible)

1. Combustible exterior walls

2. Typical single-family home construction method

3. Wood framing

F. Metal Frame Construction


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1. Light steel framing most common, but more likely for industrial, not residential.

2. Special fire considerations re: susceptibility to melting and need for fire protection.

3. Decreased vs. increased costs due to special materials and labor.

G. Protected “A” v. “B”

1. Protected “A” building has additional fire rated coating or cover

2. Extends fire resistance rating at least 1 hour

3. Protected “B” means no additional fire rated coating or cover

X. METHODOLOGY OF DETERMINING VALUE

A. Responsibilities of Agents/Brokers After AB 2022

1. CCR 2695.182

o Agent must provide the insured with a copy of the replacement cost estimate at the time the policy limit is set.

o Agent must maintain a copy of the estimate for the entire term of the policy plus five years after expiration.

o Changes or updates must be provided within 60 days from the date generated.

o For policies which are not bound, estimate records must be kept for three years.

2. CCR 2695.183

o RC estimates cannot include “demand surge” and agents/brokers must inform insured of this fact; agents/brokers can apprise customers that additional coverage can be obtained to protect for this contingency.

o Agents/brokers who provide estimates or rely upon estimates of others must ensure that the estimate includes all expenses that would be reasonably incurred to rebuild the structure (including the components listed in V above).

o RC estimates cannot be based on resale value of the land or the outstanding balance of any loan.

o RC estimates cannot include a deduction for physical depreciation.


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o If it does not meet the standards, the agent/broker must explain exactly what elements it does not address.

3. When an Insurance Company Directs the Agent/Broker to Use its Valuation Software

o When an insurer requires a specific source or tool to create a RC estimate, the insurer must prescribe procedures to be followed when using the source or tool;

o the insurer must provide the agent training to properly use the tools or source;

o The insurer and not the agent shall be responsible for any noncompliance.

B. Property Valuation Tools (e.g. Marshall-Swift Evaluation)

1. Does the PVT do the following:

o Collect data on a regular basis

o Collect wage rates, both union and nonunion

o Assess productivity rates and crew sizes

o Consider local regulations, debris removal restrictions, license fees, building code requirements, hillside stability and foundation costs

o Consider data from past claims

o Include architect fees

o Factor additional costs for older structures

o Engage in quality control by comparing real construction costs with claim settlements

2. Xactware

o Xactimate commonly used in insurance industry

o Value 360 specifically for valuation

3. Insurance Company proprietary software

o Developed by carriers for use of agents

o Factors in square footage, number of rooms, type and quality of construction, location and other relevant information.


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o Allows carrier to control the variables and estimate to their standards.

4. Other automated valuation systems being marketed.

5. Update estimates for renewals

C. Real Estate Appraisals

1. More expensive, but it is permitted so long as the appraiser uses the component approach set forth in CCR 2695.183

D. Contractor's and Expert's estimates or opinions

1. Excellent source of information

2. Will likely be more expensive than the cost of online software

E. Cost “Per Square Foot” Estimates

1. Dated and insufficient basis for replacement costs

2. Does not take into effect demolition, building codes, construction quality

3. No longer complies with CCR 2685.183

F. Insured's Opinion

1. Used to be good enough; no more

2. Most insureds don’t have sufficient understanding of construction costs to reasonably estimate an entire home

3. Insureds are more likely to confuse market value with replacement costs

4. An insured’s opinion cannot be used to estimate replacement costs

G. Custom Home Elements and Effect on RCV

1. Replacement cost must take into account valuation relating to custom homes or pre-1940 homes:

o Cost of updating to building codes

o Remediation of lead paint, asbestos and the demolition and removal costs

o Fire code upgrades


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o Cost of original materials such as original wood flooring, special lath and plaster walls and ceilings, uniquely heavy rafters, lumber and sheathing

o Replacement of stone foundations

o Replacement costs of original materials such as solid wood trim and doors, crown moldings, and special decorative touches

o The higher skilled labor required to rebuild the home as it was

2. Accurate valuation estimates require consideration of the above issues, unless the insured is willing to accept commonly used materials

H. Different Cost Factors that can Affect the Replacement Value due to Location or Type of Construction

1. Housing tracts in suburban areas v. custom homes in metro areas

2. Independent vs. homeowner associations requiring special architectural rules

3. Higher costs for states, counties, particular zip codes

XI. FIRE MITIGATION AND HOW IT AFFECTS INSURANCE COSTS

A. The Fire Problem - The California Wildland-Urban Interface (“WUI”) Fire Problem

1. Specially adopted Building Codes for Fire Hazard Severity Zones and Wildlife Interface Zones

2. Information on the WUI and applicable requirements can be downloaded at http://www.fire.ca.gov/fire_prevention/fire_prevention_wildland.php

3. Specially approved building materials, and compliance with other requirements is necessary.

B. Risk and Hazard Effects in the California WUI

1. Topography

o Flood, landslide, windstorm and fire risks

o Limited access, egress and firefighter availability

o Populations expanding into high hazard zones.

2. Fuel types and locations


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o Wild brush

o Uncleared residential brush

o Inappropriate or ill maintained landscaping

3. Weather

o Drought

o High winds

o Rain storms

4. Construction

o Special requirements for siding, sheathing, exterior windows, eaves, and decks.

o Special ignition-resistant materials.

o County-by county requirements.

5. State Fire Marshall Building Materials Listing Program

C. Laws that Impact the Mitigation of Risk and Hazard

1. Current state and local laws statutes and regulations that address efforts to mitigate risk and hazards

2. Requirements for defensible space and fire-resistant requirements

o Brush clearance ordinances

o Trash abatement ordinances

o Flammable substance storage ordinances

o Restrictions from activities, e.g. Fireworks, leaf burning.

3. Building construction

o Fire suppression systems

o Non-flammable and treated building materials

4. Land use and planning

o Area fire mitigation plans


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o Mandated practices, methods and materials

D. How To Provide Mitigation

1. Evaluation of insured’s management of fire threat

o Brush clearance and abatement

o Housekeeping re: trash, storage of flammable substances

o Area-appropriate landscaping and building materials

o Fire suppression devices and systems

2. Using a complete fire protection approach that recognizes sound engineering (building construction) and land use (defensible space and vegetation modifications)

3. Hazards in using more than one "tool in the tool box" to address the risk and hazards associated with the WUI and reduce the potential for loss

XII. NEW REGULATIONS IN THE CALIFORNIA CODE OF REGULATIONS

A. Section 2695.181: Standards for Real Estate Appraisers

1. Requires valuations by real estate appraisers to comply with these regulations

2. Reference to CIC § 1749.859(d)

B. Section 2695.182: Maintenance of Documentation

1. Applies to licensees making valuation estimates

2. Prescribed documents to be maintained in insured/applicant file, including all documents used to determine the estimate/amount

C. Section 2695.183: Producer Standards and Requirements

1. Requirements for valuation estimates

2. Requirements for reliance on replacement cost

3. Requirements to set or recommend a HO policy limit

4. Lists what cannot be relied upon

5. Reasonable steps for verification of estimates prepared by others

6. Producer responsibility for estimate


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7. Violations, with penalties

8. Compliance requirements and insurer responsibility


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Homeowners’ Insurance Valuation: What Agents and Brokers Need to Know

Moderator

Kristi Dean, J.D. Kristi is a principal at the law firm STONE | ROSENBLATT | CHA in Woodland Hills. A graduate of Pepperdine School of Law, Kristi has been practicing in the insurance law field since 1984. Kristi chairs the insurance practice group at SRC, which encompasses insurance coverage, bad faith insurance litigation, insurance agent errors and omissions, and services insurance agent and broker transactional needs. Kristi is an experienced lecturer as well as successful lecturer. She is a California Department of Insurance continuing education provider and has presented in seminars and programs throughout the United States and the UK on insurance-related topics Kristi is a member of industry organizations including CIWA, NAPSLO and serves as a committee member for the bad faith and fraud committee with the Council of Litigation Management.

Panelists

Karen Bever, CPCU, ASLI, AIM

Karen started in the insurance business in May of 1973 as an agent at The Prudential Insurance Company in Tucson, AZ. In July of 1974 she moved to the Property and Casualty Division in Scottsdale, AZ. In the last 38 years, virtually all of her career has been devoted to underwriting, in personal lines.

Karen moved to American Reliable Insurance Company in August of 2000 as an Operations Supervisor, but was quickly moved to the Agriculture Underwriting team for about a year and a half until that division was moved to Omaha. She then moved to ARIC Personal Underwriting, where she has been for almost 9 years.

Karen completed her INS courses around 1993, and three years later she obtained her CPCU designation. She then got her degree in Business Management in Oct of 1998. She has completed Associate designations in both Management and in Surplus Lines Insurance.

Karen has conducted dozens of underwriting classes for agents and underwriters Personal Lines Underwriting is her first love and sharing with others is her first joy.


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Leslie Blozan, J.D.

Leslie Blozan began her legal career as a clerk for in-house counsel at Great American Insurance Company in 1976, and has worked in the insurance field ever since. A graduate of Loyola Law School in Los Angeles, she has split her focus between civil litigation defense, insurance defense litigation and insurance coverage. Leslie is a senior associate at firm STONE | ROSENBLATT | CHA where she is a frequent contributor to the firm newsletter and provider of in-house continuing education seminars within the firm. Other seminars presented include certification training for London brokers and presenter at CIWA conferences.

A member of the California bar since 1978, Leslie is admitted to practice in all courts of the state, as well as in multiple United States District Courts, as well as the United States Court of Appeals. Over the course of her career, she has defended both insureds and insurers before judges and juries and in numerous arbitrations, appraisals and mediations.

Mike Newfield

Mike Newfield has been working in the insurance industry since 1968, when he started out as a multi-lines adjuster for Maryland Casualty in New York. Over the years, he gained experience, working for carriers, MGAs and TPAs. He is currently employed by Dynamic Claims Services, Inc., where he was worked for the past 14 years. His current position is Account Manager, with responsibility for supervision and handling of SIR accounts - CD quality control for reporting to NACIC and the handling of CD, GL, GKLL and property claims. Mike also serves as an expert witness, insurance appraiser and insurance umpire. He is familiar with the full range of construction issues, including construction defect, valuation and replacement costs. In addition to his insurance duties, Mike volunteers his time to local governmental entities. He has served as Traffic/Transportation Commissioner for the City of Calabasas since 2003, and is a coordinator of the disaster response team (FEMA/CERT) for the City of Westlake Village. He is also a board member and past president of the Malibu/Lost Hills Sheriff’s Foundation. Gidon Vardi, Ph.D.

Gidon Vardi has unique qualifications as a licensed building contractor holding a Ph.D. with a specialty in insurance appraisals. His building experience includes the full range of residential and commercial construction. Gidon is also an ICC Certified Building Inspector and ICC Certified Accessibility Inspector/Plan Examiner. He is qualified to research and give expert opinions regarding code compliance, safety, ADA compliance, construction cost estimates, scope or repair estimates and he is California Building Code certified.

As president of XL Services, Inc., Gidon Vardi is involved in both forensic work and regular construction activities. He has qualified as an expert witness in courts throughout the state of California. Apart from his formal education and construction experience, Gidon is trained as a mediator, having attended the prestigious Straus Institute for Dispute Resolution at Pepperdine University School of Law.

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