SoCal 2007 WildfireRoadmap to Recovery:Legal Issues Revisited…Bad Faith, Insurance Code Section 2051.5(c) (Replace vs. Rebuild) and UnderinsuranceMeeting 16: June 26, 2008Rancho Bernardo Community Presbyterian Church

SoCal 2007 WildfireRoadmap to Recovery:Legal Issues Revisited…Bad Faith, Insurance Code Section 2051.5(c) (Replace vs. Rebuild) and UnderinsuranceMeeting 16: June 26, 2008Rancho Bernardo Community Presbyterian Church

www.unitedpolicyholders.orgKaren Reimusreimus1@aol.com

Mark your calendar for upcoming Roadmap to Recovery meetings… Thursday, July 17:  (1) Interfacing with an HOA after a

total loss; (2) City of San Diego Code Upgrade Update

Thursday, July 31: Integrating fire-resistant technology/techniques into your rebuild

August - Insurance interest group meetings only Thursday, August 14 Thursday, August 28

Thursday, September 11: Pre-1st Year Fire Anniversary Legal Issues

Additional Support Resources from United Policyholders to Help You Navigate the Catastrophic Property Loss Recovery Process: Disaster Recovery Mentor Program

Previous catastrophic loss survivors are available to provide emotional support and “real-life” insight about recovering from a catastrophic property loss. For more information, e-mail Karen Reimus at karen@unitedpolicyholders.org;

“Survivor to Survivor” ListserveA restricted listserve for ‘07 Firestorm Survivors only. It provides a convenient means of sharing valuable information with others who are similarly situated. For more information, e-mail Karen Reimus at karen@unitedpolicyholders.org;

“Ask An Expert” On-line Forum A restricted on-line forum where 2007 Firestorm Survivors can easily obtain answers to disaster recovery-related questions from experts in the field. Forum participants can direct questions to: 1) an attorney, 2) a claims handling professional, or 3) a previous catastrophic loss survivor. For more information, e-mail Emily Cabril at emily@unitedpolicyholders.org.

Videos of Roadmap to Recovery Meetings Now Available… Previous Rancho Bernardo Roadmap to Recovery

meetings may now be viewed as videos at the United Policyholders website

To view previous meetings, go to www.unitedpolicyholders.org.  On the homepage, at the top left corner.  It says, "'Roadmap to Recovery'

Watch and listen to live videos".  Click on that verbage and you will be directed to a page that lists the previous Roadmap to Recovery meetings

From there, simply click on the meeting date/topic that you want to view.  Download time for the videos varies depending on computer and internet connection

United Policyholders Website

Previous Roadmap to Recovery Meetings Now Available… Previous Rancho Bernardo Roadmap to Recovery

meetings may now be viewed from the United Policyholders website; 

To view previous meetings, go to www.unitedpolicyholders.org.  Once on the homepage, look at the top left corner.  It says, "'Roadmap to Recovery' Watch and listen to live videos".  Click on that verbage and you will be directed to a page that lists the previous Roadmap to Recovery meetings;

From there, you simply click on the meeting date/topic that you want to view.  Download time for the videos will vary depending on your computer and internet connection.

Thank you to the following for making the online viewing possible… Rancho Bernardo Community Presbyterian Church

Jann Hoff

TV Magic, Inc. Stephen Rosen (2003 Cedar Fire Survivor – Scripps Ranch) Scott Richison

  United Policyholders Staff Amy Bach, Executive Director Stefanay Allen, Dragoon Studios

The Fire Relief Biotech Recovery Fund of the San Diego Regional Disaster Fund

The California Community Foundation

The Fine Print…

The information provided in this program is intended for general educational purposes only. It should not be construed as legal advice.

The speakers at today’s program are volunteering their time as educators.

Neither United Policyholders nor the Rancho Bernardo Community Presbyterian Church endorse or warrant the quality or services of any volunteer speakers.

Going home one step at a time

Celebrating along the Road Home: Ideas and Encouragement for 2007 Fire Survivors

from Cedar Fire Survivors, United Policyholders, and RBCPC

NEW P

AMPHLETJan Rasmussen, RB United will distribute

• Native San Diegan• Graduate of Georgetown University Law Center, 1983• Member, American Board of Trial Advocates, National Board of

Trial Advocacy, District of Columbia Bar and U.S. Supreme Court Bar. • Authored several articles on insurance coverage• Has lectured to insurance professionals and attorneys locally, nationally,

and internationally• Successfully prosecuted and defended numerous civil cases in State and

Federal court, including fire loss claims.• Firm includes a licensed architect/attorney specializing in construction

related cases. • The firm has handled hundreds of insurance coverage and bad faith

claims. • Firm is located in Rancho Santa Fe, California,

http://www.limandri.com

CHARLES S. LiMANDRI

INSURANCE BAD FAITH

By: Charles S. LiMandri, Esq.

Three Tier Analysis:

1. Coverage

2. Bad Faith

3. Punitive Damages

Coverage:

1. Structures2. Personal Property3. Additional Living Expenses4. Prejudgment Interest (Liquidated Amounts)

Bad Faith Analysis:

1. Requires Coverage

2. Not Mere Mistakes

3. Unreasonable Conduct

4. Not Genuine Dispute

Bad Faith Damages:

1. Attorneys’ Fees

2. Emotional Distress

3. Punitive Damages

Punitive Damages:

1. Malice

2. Oppression

3. Fraud

4. Amount: 4 to 9 times Compensatory

Damages

Examples of Bad Faith:

1. Overly restrictive interpretation of policy2. Wrongful denial of policy benefits3. Failure to fully and fairly investigate claim4. Delay in paying policy benefits5. Failure to pay undisputed amount due6. Unreasonable demands for Proof of Claim

STANDARDS FOR ADJUSTING CLAIM:

1. Respond to written inquires in writing within 15 days

2. Upon receiving Proof of Claim, accept or deny

claim within 40 calendar days

3. If claim is denied in whole or part, cite facts

and policy provisions applicable to denial

Duties Owed By Insurer:

1. Good faith and fair dealing

2. Prompt response to claim

3. Use of superior knowledge of policy and damages

4. Seek out and offer benefits

5. Timely investigation, decision and payment

6. Willingness to keep an open mind

7. Willingness to reconsider

8. Use of independent investigators

9. Misrepresenting coverage

10. Hostile attitude and threats

Insurer Defenses:

1. Contractual limitations period (tolling)

2. Statute of limitations

3. Effect of insured’s conduct - No comparative bad faith

4. Advice of counsel - Attorney as adjuster

5. Offer of appraisal

6. Settlement and release

Appraisal:

1. Not required in disasters

2. Determination of actual cash value

3. No coverage questions

4. Avoidance of bad faith

5. Prerequisites to appraisal

6. Obtain claim-related documents

Claim Related Documents:

1. Repair and replacement estimates and bids 2. Appraisals

3. Scopes of loss4. Drawings5. Plans6. Reports7. Third party findings on the amount of loss8. Covered damages9. Cost of repairs

10. And all other valuation, measurement, and loss adjustment calculations of the amount of loss, covered

damages, and cost of repairs

Advice to Insureds:

1. Be truthful

2. Don’t overstate damages

3. Be courteous

4. Keep copies of all correspondence

5. Keep journal of all telephone calls

6. Do chronology of key events

Litigation With Insurer:

1. Duty of good faith and fair dealing continues

2. Low-ball settlement offers

3. Litigation conduct privileged

4. Use of claim file

5. Use of claims manual

6. Juror attitudes

Closing:

Thank you.

Law Offices of Charles S. LiMandri, APC

Website: www.limandrilaw.com

PROFILE FOR CHARLES S. LiMANDRI

Charles S. LiMandri is a native San Diegan who has been representing insurance companies and insureds in coverage and bad faith litigation since graduating from Georgetown University Law Center in 1983. He is one of a select few California attorneys who are members of both the American Board of Trial Advocates and the National Board of Trial Advocacy, as well as the District of Columbia Bar and the U.S. Supreme Court Bar. He has successfully prosecuted and defended numerous civil cases in State and Federal court, including fire loss claims. He is a member of the Board of Editors of the California Insurance Litigation Reporter and the California Tort Reporter, published by West Group. Mr. LiMandri has also authored several articles on insurance coverage issues and he has lectured to insurance professionals and attorneys locally, nationally, and internationally. His firm includes a licensed architect/attorney specializing in construction related cases. The firm has handled hundreds of insurance coverage and bad faith claims. Mr. LiMandri also represented the City of San Diego, pro bono, in the highly successful Mt. Soledad Cross litigation. His firm is located in Rancho Santa Fe, California, and can be visited at www.limandri.com.http://www.limandri.com.

Roadmap to Recovery: June 26th, 2008

Follow the green (brick road): We’re in California, not Oz

Roadmap to Recovery: June 26th, 2008

Follow the green (brick road): We’re in California, not Oz

Amy Bach, Esq.

www.unitedpolicyholders.org

Q:  I don’t want to rebuild.  I want to max out my insurance benefits and buy elsewhere.  What should I do? 

A: Document and “prove up” the cost of rebuilding your destroyed home with one of like kind and quality, according to current building codes, via a well-prepared scope of loss and rebuilding estimate, even though you do not intend to rebuild. 

Try to negotiate a settlement with your insurer for the amount it would cost if – in theory – you were going to rebuild.  Ideally, you should be able to use that settlement to buy elsewhere.

Q:  But my insurer says I only get paid replacement cost if I rebuild…

A: That’s not true.  Under California law – if your insurer sold you a replacement cost policy, it must pay you the reasonable replacement cost of your dwelling, including amounts owing under extended replacement cost provisions/endorsements, regardless of whether you replace it by rebuilding or buying elsewhere. 

CA. law offers a special protection for those who want to buy, not rebuild after losing a home:

 Ins. Code § 2051.5  (c) was passed after the Cedar fire:

In the event of a total loss of the insured structure, no policy issued or delivered in this state may contain a provision that limits or denies payment of the replacement cost in the event the insured decides to rebuild or replace the property at a location other than the insured premises.

However, the measure of indemnity shall be based upon the replacement cost of the insured property and shall not be based upon the cost to repair, rebuild, or replace at a location other than the insured premises.

United Policyholders’ view:

It is our understanding that this section requires insurers to pay RC policyholders an amount equal to the full replacement cost of the original, insured, destroyed dwelling (up to policy limits, including all extended limits provide via endorsements/riders) upon reasonable proof of the policyholder’s intent to rebuild or replace their dwelling, without adjustment for lot values, realtor commissions or amounts actually spent to buy elsewhere.

It can’t be that simple…right?

Right. This is a new, untested law Insurance companies are taking differing positions on what and

how they will pay those who want to buy, not rebuild The CDI issued a legal opinion stating its view The CDI opinion did not address the issue of land values At least one insurer is saying it will not comply with the CDI opinion Specifics of the law will be tested in court United Policyholders has been working for over six months to help

homeowners take advantage of the flexibility and protection this law offers

Hiring a qualified policyholder attorney may be the best option for those who want to buy not rebuild without being penalized financially

What did the CDI opinion say?

Extended RC provisions apply even if you buy, not rebuild

You can’t buy a smaller/cheaper home and pocket the difference

Can my insurer deduct the value of the land @ the new location? If your insurer has put wording in your policy that

specifically states it will deduct land value if you replace by buying elsewhere, consult with a qualified attorney to get his or her view on whether your insurer can enforce the deduction given the wording of Ins. Code 2051.5(c)

Argue that it’s not “unjust enrichment” to allow you to keep the old (devalued due to fire damage) lot plus a new one b/c the new home is by definition lesser than the old one b/c the new home plus a lot cost the same amount as my old house cost on its own without a lot.

Are there any other arguments I can make to convince my insurer to commit to pay my full RC benefits so I can replace my home with an existing one?

A cash-out settlement will be in everyone’s best interest

The insurer’s reps unreasonably delayed payments, responding to calls, letters, etc.

Document in writing and review: Any abusive behavior by adjusters/company personnel Lowball offers, lowball estimates Company’s failure to advance ALE or contents funds Any misrepresentations of policy provisions or limits Failure to explain the process or provide necessary forms, instructions, etc. Unreasonable requests for info/EUO/recorded statement

What does the word “replacement” mean on Planet Earth”?

“A person or thing that takes the place of another” Source: Webster’s New Universal Unabridged Dictionary

What Does "Replacement Cost" Mean on Planet Insurance Industry?

REPLACEMENT COST INSURANCE: DEFINITION Insurance which replaces lost, stolen or destroyed property by paying current market prices, rather than depreciated value. www.investorwords.com

The term "replacement cost" is defined or explained in the policy. Simply stated, it means the cost to replace the property on the same premises with other property of comparable material and quality used for the same purpose. This applies unless the limit of insurance or the cost actually spent to repair or replace the damaged property is less.

Refer to your policy for the exact definition and explanation of replacement cost. Source: Allen Financial Group, www.egggroup.com

Underinsurance is a challenging problem and there is no “one size fits all” solution

It is such a common problem after large- scale disasters that UP has an entire section of our website devoted to the subject. 

UP’s Executive Director is working closely with the CA. Ins. Comm’r and his legal team, as well as private attorneys and insurer representatives to help 2007 wildfire survivors who are underinsured.

UP is working to “depublish” a recent legal decision

Go to the "Claims Tips“ section at www.uphelp.org and find "Underinsurance Help“ to learn more…

2007 UP/RBUnited/RMHL Wildfire Claim Status Survey results: After 8 months, 46% of those surveyed had received a

dwelling claim settlement offer. Of these, one third said the offer was enough to rebuild their home.

75% of respondents reported that their dwellings were underinsured. The average amount of underinsurance among those surveyed was $240,000.

Only 18% of respondents have complained to the California Department of Insurance.

2007 UP/RBUnited/RMHL Wildfire Claim Status Survey results:

Less than 22% of respondents got the list of reimbursable ALE items that insurers are required by California law to provide.

Insurers had waived the requirement that every single destroyed item be itemized/inventoried for 25% of the respondents.

Underinsurance is less of a problem on personal property and temporary living expenses than on dwelling coverage.

Other notable results: The survey contradicts industry claims that nearly 90% of

the Fall 2007 disaster claims were settled by April, 2008. Underinsurance remains a severe problem for homeowners. See

http://www.iinc.org/articles/247/1/Majority-of-October-Fire-Insurance-Claims-Resolved/Page1.html

Homes were insured for approx. $157 per square foot.

The actual cost of rebuilding is $220-$350 per SF. Survey respondents were insured for as little as $31.20 per square foot and as much as $425.34 per square foot.

Other notable results:

The most common reason given for not complaining to the CDI was that the homeowner is still in negotiation with their insurance company.

Almost 25% of people who hadn’t filed a complaint believed it would do no good, would make matters worse or were afraid of angering their insurance company.

Underinsurance RX “to do” recap:

Network with others insured with your same company Visit “Underinsurance Help” at www.uphelp.org Start at the “Find Help” section of www.uphelp.org to find

qualified professional help Pursue all avenues to get the insurance company to

cooperate informally If you have a strong case, use our civil justice system –

it’s a cornerstone of our democratic system If you do not have a strong case, pursue alternatives 

CDI Consumer Hotline: 800-927-HELP

Our heartfelt thanks to:

The Rancho Bernardo Community Presbyterian Church

David Shalinsky/Janis Rasmussen All our UP Mentors and Sponsors The speakers at tonight’s meeting

Mark your calendar for upcoming Roadmap to Recovery meetings… Thursday, July 17:  (1) Interfacing with an HOA after a

total loss; (2) City of San Diego Code Upgrade Update

Thursday, July 31: Integrating fire-resistant technology/techniques into your rebuild

August - Insurance interest group meetings only Thursday, August 14 Thursday, August 28

Thursday, September 11: Pre-1st Year Fire Anniversary Legal Issues

Break Out Sessions

State Farm : Dormer West Farmers : Skylight West

Allstate : Upper Courtside East

USAA: Small room off lobby