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Step-by-Step Guide: Property Damage- What to do if Your House Burns Down, Floods, or Gets Struck by

Updated: Dec 11, 2019

What if you or someone close to you suffered from a tragic loss, such as their house burning down, flooding, or getting struck by lightning? How do you ensure you get the maximum compensation from your insurance company? Ball & McCann has some insight on those answers.


According to the National Fire and Protection Association, U.S. fire departments responded to responded to an estimated 1,298,000 fires in 2014. With winter months quickly approaching, the average household is even more susceptible to fire loss due to heating, candles, and excess electrical usage. Ball & McCann offers step by step guidelines on how to handle sudden, unfortunate events, and offers advice that will ensure that you and your family obtain the most amount of compensation from your insurance company.


Step 1: Safety First.

Call 9-1-1 immediately. The well-being and safety of you and your family should be of the upmost concern. Make sure all of the people and pets in and around the fire are as far away as possible from the house, so the hardworking firemen and law enforcement personnel can do their job and ensure your safety.


Step 2: Contact Your Insurance Agent.

Submit a formal claim with your insurance company. Be diligent in keeping comprehensive records of all of your communications. Take pictures and videos of the home, and take notes on every conversation that you have and record who that conversation was with. Begin taking inventory of all the personal property items within the house so your claim to the insurance company is thorough and complete.


Step 3: Your Insurer will Send out an Independent Adjuster to Investigate the Claim.

Next, your insurance company will send out an "independent adjuster" to evaluate the claim. Don't be fooled by the name, an "independent adjuster" is hired and paid by the insurance company to provide favorable results for the insurance company at your expense. Provide the independent adjuster with as much information as possible related to your personal property within the house, and any other information that you believe will add value to your claim. However, do not accept their findings as the definitive right answer, they are paid to find things that would hinder coverage of your loss, and are trying to save the insurance company as much as possible.


Step 4: Determine Whether Your Insurance Company Will Cover Your Claim.

If your insurance company determines it is going to cover your claim, the proceed to Step 5. If your insurance company determines it is not going to cover your claim, then immediately contact the law firm of Ball & McCann to assist you. The longer you wait and the more you allow the insurance company to delay your rightful coverage, the more difficult it can be to appeal their decision without the need to file suit.


Step 5: Hire an Entity to Represent Your Interests.

Once an independent adjuster evaluates your claim, assuming your insurance company is going to cover your claim, you are given the decision to decide how you would like to protect your interests. You are given three options: (1) Handle the claim yourself; (2) Hire your own "public adjuster"; or (3) hire an attorney, such as Ball & McCann, P.C. to represent your interests, adjust the claim, and work with the insurance companies and contractors to ensure that your home is replaced to the same like kind and quality as it was prior to the occurrence. At this point, be cautious of public adjusters, contractors, and restoration companies soliciting your business, as there are strict statutory restrictions on the time period and the manner in which they can solicit your business. If you have any questions, do not hesitate to contact the law firm of Ball & McCann, P.C. so we can answer any questions you might have regarding your claim.


Step 6: Negotiate Values.

Once you file the claim, you will receive an estimate from the independent adjuster hired by your insurance carrier to bring your property and personal items back to the condition it was prior to the date of loss. There are two different methods of compensating a policyholder to bring them back to pre-loss condition: One is to pay the Replacement Cost Value (RCV) and another is to pay the Actual Cost Value (ACV).


If you have an ACV policy, your insurance carrier will estimate the value of damages, and deduct your deductible and the value of depreciation. Depreciation, or "hold back" is the decrease in value from all causes, including age, and wear and tear. Once the depreciation is deducted, then you obtain the Actual Cash Value (replacement cost with new property of like kind and quality minus depreciation) and your claim is settled.


If you have an RCV policy then you are in a stronger position. RCV is what it would cost to replace the items at today's cost or market value. Thus, if you have an RCV policy, not only will you get the Actual Cash Value check (replacement cost with new property of like kind and quality minus depreciation), but you will also get another check that accounts for the difference between the ACV and the RCV once all contractors complete repairs on the property. However, most insurance policies require that the replacement of the items or the restoration of the property be completed before they issue the remaining depreciation or hold back proceeds and it usually must be done within a certain time period as outlined in your Policy. That time frame can be anywhere from 90 days to six months for you to submit a claim for the RCV proceeds, thus do not neglect to timely submit this claim.


Step 7: Replace Damaged Property Within the Time-frame Provided by Your Policy.

As discussed in Step 6, you must actually replace the items or restore the property in order to submit a claim for the RCV depreciation. Thus, you need to keep detailed receipts and accounting of all of the items you replaced of your personal property, and ensure you are only replacing items that the insurance company knows were damaged by the cause of loss. As for restoring the dwelling or residence, you need to make sure you have an estimate from the insurance company. Once you posses that you can start researching and contacting general contractors who will come out to the property and provide you with a estimate to complete the job.


I always suggest you do not provide the insurance companies estimate to the contractors prior to them providing you with an estimate, that prevents them from inflating the total costs and allows you to get an honest opinion on what they believe it will costs. After you have obtained three or four contractor's estimates, you can make a decision based on reputation, costs, time necessary to complete the job, etc. However, at this point I always suggest that you have an attorney review the contracts and documents before you begin signing any because most times these documents are inadequate or are missing terms that can be detrimental to a smooth and timely completion date. If you choose not to hire an attorney to review the documents, at least ensure the contract provides for the exact price of materials, what type of materials, a start and end date, the contact information for the contractor, the total price of the job, etc. The more details there are in the contract the easier it is to hold the contractor to those specifications, but make sure those details are satisfactory to you and your family.


Also, make it clear in the contract that you expect the general contractor to notify you of every purchase, every hiring of subcontractors and that you expect a copy every receipt and or invoice for any of those costs. If they refuse to accept those terms, then they are not the right contractor for you.


Step 8: Allocate The Insurance Proceeds & Require Lien Waivers Before Payment

If a contractor requires you to make full payment upfront before the work is performed, do not sign any contract with them and find yourself a new contractor as they will lead you into nothing but bad news. However, it is somewhat common to disburse payments as the project progresses, if you have an additional payee on the insurance proceeds such as your mortgagee (Mortgage lender) then they will likely require you deposit the proceeds with them in an escrow account. The mortgagee will then pay either the insured or the contractor at your request but only upon a showing that the dwelling restoration is progressing as planned and is satisfactory workmanlike performance.


Before making any payments or receiving any proceeds make sure to contact your insurance agent to determine if you have an additional payee or contact your mortgagee to determine if they require you to deposit the proceeds into their escrow account. They will provide you with the information you need on how to deposit the proceeds and when to deposit the proceeds. One the job is completed and all of the payments to the contractors have been made, you are now hopefully back somewhat of a similar position you were in before the property damage occurred. If any issues come to light at this point in the process you should make them immediately known and if need be contact Ball & McCann, P.C. to provide you with the assistance and guidance you need.


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