Large House Fire, insurance / tenant questions

4 Replies

Two nights ago the only house I manage that I don't own (favor to my GF) had a large fire causing large amounts of damage.  It was from old wiring in the house that caused it and I'm glad nobody got hurt.

 I have a list of questions I 'm struggling with.

I have never had an insurance claim quite like this.  The contractor I spoke to wants to walk and speak with the insurance adjustor.  This seems unwise to me in that I'm sure his bid will end up exactly what the insurance company will pay.  I get there could be items that actually cost more which an adjustor undervalues but those issues can be worked and a slight delay isn't a huge issue.  I also don't understand how insurance company typically hands the money out.  I know it goes to the mortgage company typically so is it up to them how they distribute it?  How are fixtures and furnishings selected?  I want to make sure I'm not getting builder grade quality items in this higher-end home. 

The renters were students at a private university.  In the lease I mention renters insurance and that they are responsible for there own belongs in the event of a fire/flood/break in etc.  They decided it wasn't worth it and they got burned (pardon the pun) so they lost a lot.  While I feel very bad for them I'm very nervous they might try to come after me for something.  Is there cause for concern here?  There lease was up Dec 31 so I told them it's basically done and they should start finding a new place to live.  The university has provided them with temporary housing due to the situation.

You could have the insurance cut you the check instead and select your own repair person or try and perform the work yourself.  I wouldn't worry about the tenants' belongings if it was in the lease that they are supposed to get renters insurance if they want their belongings covered.

One concern I had was about housing.  I had thought I had read somewhere a situation similar where the landlord was forced to put them up in a hotel til other housing was obtained.

@John T. tenants are responsible for their belongings and new residence.  

As for he insurance adjuster, it is standard procedure for them to inspect the loss.

The contractor wants to walk with the adjuster to make sure he is not going to do work he will compensated for.  You should attend that walk through to make sure you know where everyone stands.

The contractor will submit a bid for the worked and the adjuster will approve or decline the amounts set for each part of the job.  They will go as far to say they will only pay for painting the  1/2 of of a wall that damaged, but the other half is fine and does not need it.

Depending on your policy, you can ask for cash payout up front, but they will only give you the Actual Cash Value of the claim.  If you want to access the replacement cost of the policy, you need a contractor to be paid directly from the insurance carrier.

Let the adjuster make you an offer, if you don't like it, you can always hire an independent adjuster to handle the claim for you.

Originally posted by @Jason Bott :

@John T. tenants are responsible for their belongings and new residence.  

As for he insurance adjuster, it is standard procedure for them to inspect the loss.

The contractor wants to walk with the adjuster to make sure he is not going to do work he will compensated for.  You should attend that walk through to make sure you know where everyone stands.

The contractor will submit a bid for the worked and the adjuster will approve or decline the amounts set for each part of the job.  They will go as far to say they will only pay for painting the  1/2 of of a wall that damaged, but the other half is fine and does not need it.

Depending on your policy, you can ask for cash payout up front, but they will only give you the Actual Cash Value of the claim.  If you want to access the replacement cost of the policy, you need a contractor to be paid directly from the insurance carrier.

Let the adjuster make you an offer, if you don't like it, you can always hire an independent adjuster to handle the claim for you.

This is good info.  I would like to add to it.

By all means, let your contractor walk through with the adjuster.  With my claim, it got me a better payout because the adjuster was leaving stuff out.

As far as fixtures, you will get paid for what was in there.  If you want improved fixtures, you may have to pay out of pocket.  The difference in price of material may not be that significant.  Or maybe the contractor has some discounts somewhere.

Your biggest 2 hurdles will be permits and the mortgage company. 

Permitting authorities often have power trips and that will cause issues. Also, you will have to bring everything up to current code. Hopefully, your policy has an ordinance upgrade payout.  It may or may not be enough.

If it is a large payout and you are current on your mortgage, then the mortgage company will confiscate the insurance check and give out small advances based on the percentage completion.  They require an inspector to come out (sometimes they make you pay an inspection fee---this is not covered by insurance), submit a report, and then they will decide how much they give out.  Absolutely malarkey.  Sometimes between each inspection and payout, it was 3 weeks.  As a result of this BS and in order to move the project forward, I had to use my own money and wait on the reimbursement.  One of the inspectors told me another homeowner was in the process for over 2 years.  He needed money to pay the contractor to work on his house, but the mortgage company would not advance the money.  If you have a replacement policy, the depreciation part will be payable upon completion.  This could be a large sum, mine was about 35% of the claim. If you have an ACV policy, you will not get the depreciation and you will be coming out of pocket for the difference.  Also, if you have loss of rents coverage, you will get rent from the insurance company every month.

If you are not current on the mortgage and it is a large payout, the mortgage company may completely take you out the loop with the money, meaning that they will deal only with the contractor.

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