1. Request that your insurance provider waive the contents itemization requirement; you might receive a portion of your claim without compiling a detailed inventory list. 

Creating an itemized inventory of all lost valuables can be arduous and unrealistic when also in the midst of planning a rebuild. A number of insurance companies have voluntarily agreed to provide some portion of an individual’s “contents” claim (items of value lost) without the insured filing an itemized claim. In some cases, they offer over 75% of the claim without itemization (see Resource #1 below). A survey conducted by United Policyholders found that 23% of respondents received 100% of their contents without being required to complete an itemized home inventory. Keep in mind, you retain the ability to recover additional benefits (above the portion offered pre-itemization) if you file an itemized claim afterwards. 

ACTION

» Review the list of insurers (Resource #1) to find out whether your insurance provider has agreed to former Commissioner Jones’ request to provide over 75% of the coverage limit without an itemized claim. Use United Policyholder’s sample letter (Resource #3) to request that your provider waive the contents itemization requirement. 

RESOURCES:

1. List of Insurers Responding to Commissioners Request to Provide over 75% of Claim Without Itemization

2. Commissioner Jones Request to Insurance Companies - CDI Press Release

3. Sample letter Requesting a Waiver of the Contents Itemization Requirement

4. Support Insurance Legislation Reform with this Post-Woolsey-Fire Progress Survey

2. If underinsured, write a letter to your insurance company requesting a reformation, which is the first step toward remedying errors they may have made when writing your policy. 

Cases of underinsurance are sometimes the result of insurance company error when underwriting your policy. For example, they may have: used the wrong square footage, forgotten to include other structures, left out inventory that you specifically requested to have insured, or even used the wrong house. If they did make an error, they may be liable to retroactively modify the plan to increase your payout. This is known as insurance reformation. 

ACTION

» Write a letter to your insurance company to request a reformation of your policy. Individuals can make these requests on their own or seek the assistance of public adjusters or attorneys. The insurance companies often reject these requests at first, but a denial is not a reason to stop asking. Always be polite and persistent. Have your points and facts well organized when you talk to the insurance company.

» If they deny repeatedly, consult with an insurance law professional before appealing the case. Even if you choose to engage an attorney to appeal, at least you can now do so with a case that is already well developed.

RESOURCES:

1. When Can You Ask for Insurance Reformation

3. Log and keep receipts for all post-disaster living expenses that are covered by insurance companies. 

Many homeowner policies cover Loss of Use or Additional Living Expenses (ALE) for either a fixed limit or fixed time. Each company’s policy is a little bit different, but generally speaking, they should pay for those living expenses incurred as a result of being displaced. ALE are required by state law (California Insurance Code - INS § 2051.5) to be paid for a minimum of 24 months after the incident. Usually they will pay for home rental directly. Examples of additional living expenses include pet boarding, gas/mileage if commuting further to work or sewer fees if you were previously on a septic system. 

ACTION

» Review your plan or ask your insurance provider fora list of all expenses covered under ALE or Loss of Use. Keep a record of all expenses that you expect to be covered by these categories and submit them monthly to your insurance provider. 

RESOURCES:

1. Department of Insurance Residential Property Claim Guide

2. FAQ about Homeowner Insurance Claims in California 

4. Ensure prior home Actual Cash Value estimate is fair, and keep receipts for all costs incurred as part of the rebuilding process. 

Insurance is required by state law to be paid in two steps. Within a month of the disaster insurance companies are supposed to provide an “Actual Cash Value” (ACV) payment that will cover the depreciated value of the items lost, including the dwelling and all personal property (California Insurance Code - INS § 2051). Most policies also pay for “Replacement Costs” (RCV) which are considered cost incurred, much like Additional Living Expenses. As part of RCV, some policies have an additional policy limit cap for rebuilding. 

For “Actual Cash Value” payment, if you disagree with the ACV payment amount, you can provide an alternative construction estimate of the prior house or your own list of personal property (with depreciation) to rebut their estimate. A good first step is to request their depreciation schedule to negotiate the depreciation rate of each category of items. This is especially important if you decide not to rebuild. If you get a contractor to create a rebuttal construction estimate, make sure they include all hard and soft costs as required by Business and Professions Code CCR 10 CA ADC § 2695.183- Standards for Estimates of Replacement Value. 

For “Replacement Costs” payment, receipt of purchase is required to claim reimbursement for cost incurred expenses (e.g. construction contract or a store receipt). Good documentation is essential to ensure that the right amount is being paid (California Insurance Code Section: 2051.5). Policies of insurance only cover the compensation for the depreciated item ACV or the replacement of like kind and quality RCV. They are not intended to pay you full replacement costs if you are not replacing or rebuilding. 

RESOURCES:

1. A Guide to Your Insurance Legal Rights in California