Log Home Fire-Builders Risk Insurance

[patguilbeaux]

Jurisdiction

Mississippi

Hi, I'm in Mississippi. I was building a beautiful Scandinavian full-scribe log home; it burned down two weeks ago, most probably arson. My concern is this: my health is not holding up well enough to rebuild and do not want to at this point.

I do not have a mortgage, nor any loan on this project. I have paid out-of-pocket for every item in the home. I put a Builder's Risk Policy on this home. Question: since I have no mortgage, will the insurance company simply write me a check for the proceeds? Or will they give me hell about it? PLEASE ADVISE!!!

 

[army judge]

You'll only know what the insurance company will do after you've filed a report to the police and the insurer.

If you've done both, you must be patient while the police and insurer investigate the matter.

 

[adjusterjack]

will they give me hell about it?

Depends on what you mean by hell.

The insurance company will investigate the cause of the fire. If arson is confirmed it will be your turn to be investigated because the owner is always the prime suspect in an arson investigation. Since you paid cash for everything and did not need a mortgage, that you are in good financial shape, and had no motive, could get that part of the investigation over with quickly. However, don't be surprised (or upset) if you are called in for an Examination Under Oath. That's pretty standard with arson fires. The investigation process could take a couple of weeks or a couple of months. No way to predict. Some people think it's hell, some don't. I suggest you just take it in stride and go with the flow.

since I have no mortgage, will the insurance company simply write me a check for the proceeds?

Once the investigation is completed and the damage is assessed, you will sign a Proof of Loss. That's also standard - no big deal - and you can probably find a sample on line. When the Proof of Loss is completed, the insurance company will issue you a check for the claim.

Keep in mind that, depending on the stage of the construction, you might only get the amount you paid out to date and not the full amount of the policy limit. The settlement should also include an allowance for "debris removal" so you can clear the land if you don't want to rebuild.

Feel free to come back to this thread if you need additional discussion during the claim process. It's what I did for a living for a long time.

 

[patguilbeaux]

Hi, thanks for your reply. Perhaps I should reiterate what I mean by 'giving me hell', and that would perhaps yield another response.

I have a friend that told me after his house fire he decided not to rebuild.

He said the insurance company told him that he would be getting $340k for his home (which all parties agreed to as that was the certified value of the home). Similar to my situation, there was no loan or mortgage involved.

When he told the insurance company that this tragedy had completely changed his life and he had no more interest in building, at that point he said the insurance company reversed course and made him an offer that was much less. As he fought through it, they kept his money for several months until finally he 'met in the middle' of the offer.

To me, to go through that would be HELL!! What are your thoughts please AJ????

 

[adjusterjack]

1 - His claim was under a homeowners policy. You have a builders risk policy. Two entirely different things.

2 - On a homeowners policy the Replacement Cost coverage says the policy will pay the depreciated amount of the claim (Actual Cash Value) up front and the balance upon completion of the repair or rebuild. I'm guessing that your friend's "hell" was because he never bothered to read and understand his coverage. So, yes, the claim may have been assessed at $340K, but the initial payment would have been a lot less after depreciation was deducted. Why there was a "meet in the middle" thing later on is something I wouldn't care to address without reading his claim file.

You do understand, however, that the settlement for your damage is likely going to be less than the amount of insurance you bought because it will be based on the cost of the improvements to date. Your improvements wouldn't have been the policy limit until the home reached completion. In fact, during the earlier stages of construction, a claim value could have been a mere fraction of the policy limit.

While you are waiting for the arson investigation to be completed, I suggest you gather up all your receipts for your permits, design costs, engineering costs, labor and materials, make a duplicate set for your claim rep and an itemization of all the costs along with an estimate from a demo company for the removal of the damaged structure (and photos of the damaged structure). It's likely to speed up things considerably. Do it even if the adjuster has already been out to the property.

 

[patguilbeaux]

Hi, met with the Chief Adjuster this morning. After the walk-through of the property and myself providing documentation and pictures of the home to that point, he started to explain the Builders Risk Policy. At a particular moment things got really quiet and he said that he had to tell me something that could possibly be very upsetting. He told me that their was a clause in the policy that stated "If the home is more than 30 percent complete at the time of the purchase of the policy (which was 19MAY16) then there is a possibility that the ONLY thing covered to that point would be the 30%. The clause starts off with "existing inventory…"

In truth, the home was about 80-85% complete when the policy was taken out, and all of the pictures and documents prove that in absoluteness. SO, I guess the worry her-and a HUGE one- is that I will not be reimbursed for anything that happened beyond 30%!!

Would you have any experience to discuss this? I am absolutely at a loss about this clause. PLEASE advise. Thank you very much.

 

[army judge]

Hi, met with the Chief Adjuster this morning. After the walk-through of the property and myself providing documentation and pictures of the home to that point, he started to explain the Builders Risk Policy. At a particular moment things got really quiet and he said that he had to tell me something that could possibly be very upsetting. He told me that their was a clause in the policy that stated "If the home is more than 30 percent complete at the time of the purchase of the policy (which was 19MAY16) then there is a possibility that the ONLY thing covered to that point would be the 30%. The clause starts off with "existing inventory…"

In truth, the home was about 80-85% complete when the policy was taken out, and all of the pictures and documents prove that in absoluteness. SO, I guess the worry her-and a HUGE one- is that I will not be reimbursed for anything that happened beyond 30%!!

Would you have any experience to discuss this? I am absolutely at a loss about this clause. PLEASE advise. Thank you very much.

I appreciate how unsettling this morning's revelation might be to you.
But, it's not for certain, yet.
I suggest you be as patient as you can, considering the circumstances, and wait for a more precise, definitive, and accurate response.
The investigation is ongoing.
Until you know EXACTLY what the answer will be, the best thing to do is nothing.

If you must understand what you can do, talk to a couple local attorneys.
The initial consultation is normally offered at no charge.
You'll have 20-30 minutes to ask a few questions, and investigate the responses you receive.

Hang in there mate, the corpulent singer hang yet begun to warble.

 

[adjusterjack]

I am absolutely at a loss about this clause.

So am I. My standard form Builders Risk Coverage doesn't say anything like that.

http://calmutual.com/docs/pdf/Policy Form PDF Copies/CP 00 20 04 02.pdf

However, it stands to reason that a building that's 85% complete might not qualify for a builders risk policy.

Did you read that policy provision? Please quote it word for word here, in it's entirety.

In truth, the home was about 80-85% complete when the policy was taken out, and all of the pictures and documents prove that in absoluteness.

When did those pictures and documents "prove" it?

When you signed the application for the policy, were those pictures and documents attached to the application and conveyed to the company underwriters along with the application?

You were obviously not aware of this potential issue until now so I'm guessing you received your policy after buying it and never bothered to read it.

 

[patguilbeaux]

10-4. The application process was about 2 minutes and they only sent me a decorations page and a couple other docs, not the policy in its entirety. I had to request that from the adjuster after the fire.

Thanks for your input...

 

[adjusterjack]

The application process was about 2 minutes and they only sent me a decorations page and a couple other docs, not the policy in its entirety.

Your agent may have some professional liability exposure here for not explaining the limitations to you. But you might also have the duty to understand the insurance you are buying when you buy it. Courts are divided on that issue. That's an issue I can research for you at a later date if it becomes necessary depending on the outcome of your claim.

Meantime, I would still like to read that part of your policy that addresses the limitation. Better yet, if you can scan the form and upload it to this thread, I'd prefer to read the whole thing.

I also suggest you get a copy of your application so we can see what information you provided to the underwriters.

If you don't want to do all that now, you can wait and see if the claim goes awry and then do it.

 

[patguilbeaux]

AJ, thank you very much. I have uploaded a copy of the Coverage and definitions, as the file was too big to upload here. Much obliged.

 

[patguilbeaux]

I can send you my email address and forward the policy to yours if you would like. I do not want to take much of your time. Regards.

 

[adjusterjack]

I don't do offsite consultations.

Please provide a copy of the declaration page of the policy.

 

[patguilbeaux]

Attached

 

[adjusterjack]

Bear with me while I do this one step at a time as each question or form may lead to other questions that I cannot anticipate.

1 - There is a box checked for Supplemental Declarations. Please provide a copy of that, too.

2 - Provide a copy of the Schedule of Forms and Endorsements referred to at the bottom of the page.

3 - Look through your policy and see if there are any sections that address, at length, the "existing inventory" and or "existing buildings or structures" things and provide a copy of those sections.

4 - Did you buy this policy online through Zurich's USAssure website or through a local agent where you went to an office?

Please confirm the following:

1 - 346 Grover-Barrett Rd, Picayune, MS is the location of the property where the log home was being erected. Did I get that address right? It was a bit blurry on the page.

2 - That there are no other buildings or structures on the property. If there are, name and describe them.

3 - That you live elsewhere.

I'm leaning toward the "existing inventory" and "existing buildings or structures" exclusion not applying to you but I want to get as much information before I give you my reasoning.

The application would also be a big help if you can get it.

 

[patguilbeaux]

AJ, here are some things that you've requested.
1) I sent the Supp/Dec yesterday but will resend; it is an a photograph form.
2) Schedule of forms & endorsements attached
3) Other than what I forwarded, I see nothing else on this "existing inventory"
4) As a former military officer I have been with USAA for many years. I called them and they sent me to their friends at Zurich
----------
1) 246 is the correct address
2) no other
3) we live in Covington, LA; about an hour away from the house site

I will round up the application in page-by-page format to satisfy the upload capacity of this forum (sorry misnumbered them).

A big thank you for your time. We seem to miss the compassion of others in today's day and time.

 

[patguilbeaux]

Another thought AJ: there is a question about the 30% on the initial application. For the life of me, I do not recall answering the question of 'how far is the construction-percent complete'. For whatever reason the number "30" appeared in the blank. This was in May '16 when I finally succumbed to purchasing the policy and spending the 1700 bucks; the home was about 80-85% complete at that point (verifiably). There is no way in HECK I would have stated that the home was at 30%. Certainly I did not know what inclusions or exclusions were in the policy at that time and for darned sure I had nothing to gain by saying the home was 30% complete, versus 80-85%.

I am very concerned about this clause to the point of nervousness.

I am a professional Project Manager who has managed Billion dollar projects and programs in several countries. I absolutely know PERCENTAGE OF COMPLETION when asked. Honestly, the application process took less than 5 minutes; they ran me through it like I was in a sprint car race.Nonetheless, thank you again for your time.

 

[patguilbeaux]

AJ, I received the attached letter. Seems to be a bit frightening. Oh My God-I had 80-85% of this home built-a Master crafter built home with large diameter logs-a potential masterpiece!! Now, as I read it, they will NOT provide me funds of more than 30%??? Please, please advise!!

 

[adjusterjack]

AJ, I received the attached letter.

There's no letter attached.

Upload it and let me get a look at it.

Out of curiosity, did the agent ask you the questions on the application and enter your answers on to the computer? Did you then review and sign an application? Or?

Using the forms list from your policy I was able to find another Zurich Builders Risk policy with a lot of the same forms including the 40471 which is your 12 page coverage booklet. That's the important one.

Here's a link to the policy. Save the link so you can refer to it as I work on it.

http://r.duckduckgo.com/l/?kh=-1&ud...ents/cbd25f84-01b1-4591-ae0c-aa2080d9d1d8.pdf

Meantime, here's a list of a few forms that were on your policy but not on the one online. Look for those form number and just give me the titles of the forms. I'll be able to tell from the title whether any of them are pertinent.

HBIS-35(04/09)

HBIS-67(04/09)

IL0119(10/12)

 

[patguilbeaux]

AJ, a person asked me questions on the phone and inputted the data. I was then provided a form to sign digitally. I do not recall reviewing the policy, but perhaps I did. Had I noticed the percentage complete being at 30%, as they list it, I certainly would have questioned it. I never received a hard-copy; it wasn't until I requested on from the adjuster after the fire that I finally received one.