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  1. #1
    Join Date
    Jul 2012
    Posts
    6

    Default Homeowner Insurance Underpayment

    My question involves insurance law for the state of: California

    My question is regarding a loss I suffered on May 1, 2019, a water pipe in my wall began leaking and destroyed a wall, some cabinets, and our hardwood flooring in our kitchen. We immediately reported the claim to USAA and we were instructed to find a contractor and submit a bid to be approved by USAA. 10 days later we submitted the bid of $33,000 and seven days after that USAA responded with a proposed settlement of $16,000. It was a very detailed bid, however, USAA insisted that the labor rates and material costs were too high. Additionally, the subtracted for depreciation on several items even though our policy states:

    "EXTENDED REPLACEMENT COST COVERAGE is intended to provide for the cost to repair or replace the damaged or destroyed dwelling without a deduction for physical depreciation. Many policies pay only the dwelling's actual cash value until the insured has actually begun or completed repairs or reconstruction on the dwelling. Extended Replacement Cost provides additional coverage above the dwelling limits up to a stated percentage or specific dollar amount. See your policy for theadditional coverage that applies."

    After some discussion with USAA, we decided to get another bid from a different contractor. That bid was submitted at a cost of $23,000, 12 DAYS later USAA responded again with similar complaints that the material and labor costs were too high and the proposed settlement was now $13,000, $3,000 less than the first settlement offer.

    The language in my policy seems to suggest that I should be provided the replacement cost to make my kitchen whole again. The constant complaining of material and labor costs being too high is bizarre to me, I don't know how many bids I'm supposed to get before it's someone they like.

    What are my options? Should I file a complaint with the California Insurance Board? Or should I hire a lawyer to review my case and speak to USAA on my behalf? I'm really at a loss of what to do as both settlement offers leave me completely dead in the water as far as getting started with the repairs.

    Thanks in advance.

  2. #2
    Join Date
    Mar 2013
    Posts
    16,859

    Default Re: Homeowner Insurance Underpayment

    Quote Quoting loyolacub68
    View Post

    Additionally, the subtracted for depreciation on several items even though our policy states:

    "EXTENDED REPLACEMENT COST COVERAGE is intended to provide for the cost to repair or replace the damaged or destroyed dwelling without a deduction for physical depreciation. Many policies pay only the dwelling's actual cash value until the insured has actually begun or completed repairs or reconstruction on the dwelling. Extended Replacement Cost provides additional coverage above the dwelling limits up to a stated percentage or specific dollar amount. See your policy for theadditional coverage that applies."
    You see where I emphasized "See your policy"? That tells me that the paragraph you quoted isn't what your policy "states."

    "Extended Replacement Cost provides additional coverage above the dwelling limits up to a stated percentage or specific dollar amount." is not the same as getting the full Replacement Cost up front without a depreciation hold back.

    Please read the Loss Settlement provisions of your dwelling coverage as well as the Extended Replacement Cost coverage part and don't rely on summaries.

    Quote Quoting loyolacub68
    View Post

    After some discussion with USAA, we decided to get another bid from a different contractor. That bid was submitted at a cost of $23,000, 12 DAYS later USAA responded again with similar complaints that the material and labor costs were too high and the proposed settlement was now $13,000, $3,000 less than the first settlement offer.
    What did your claim rep say when you asked him why his original proposed settlement of $16,000 was reduced to $13,000?

    And did your claim rep give you an itemized repair estimate for each of those two amount?

    Please answer those two question and I might be able to give you some help.

  3. #3
    Join Date
    Mar 2012
    Posts
    1,324

    Default Re: Homeowner Insurance Underpayment

    Quote Quoting loyolacub68
    View Post
    We immediately reported the claim to USAA and we were instructed to find a contractor and submit a bid to be approved by USAA.
    I had USAA and had a house fire. USAA took care of everything. They paid upfront money so I could stay in a hotel and eat. They got the contractor. I didn't have to negotiate on anything.

    This happened to me in 2011. I think you should ask USAA why a house fire in 2011 gets better treatment (no hassles) than a water leak in 2019.

  4. #4
    Join Date
    Jan 2010
    Location
    New Jersey
    Posts
    3,607

    Default Re: Homeowner Insurance Underpayment

    Quote Quoting loyolacub68
    View Post
    a water pipe in my wall began leaking and destroyed a wall, some cabinets, and our hardwood flooring in our kitchen. We immediately reported the claim to USAA and we were instructed to find a contractor and submit a bid to be approved by USAA. 10 days later we submitted the bid of $33,000
    $33,000? They should pay for the cabinets that were damaged to get replaced, not every cabinet in the kitchen. They should also pay for the section of floor that was damaged, not the entire kitchen floor. There is no way that it would cost $33,000 to replace/repair a water pipe, replace/repair sheet-rock on a wall, replace/repair a cabinet or two and replace/repair a section of damaged floor.
    I'm not a lawyer, but I did stay at a Holiday Inn Express last night.......

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