Please explain, burned house compensation in Santa Rosa, CA

DS4

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My best friends house burned to the ground in the Santa Rosa, Ca fires in Oct 2017. His house was typical for all other houses on his street. Before the fires, houses on his street sold in the 1 to 1.1 million range. So far, he has collect 1.2 million for his dwelling and contents, plus, he still owns the lot. How is this possible?
 
he is still able to live on the lot.....in a tent.....or use the money to rebuild.....not sure what you are asking.....
 
Short answer, without having much information:

Your friend's home insurance covers the cost to repair or replace the building; sale price or diminution in value is not covered under homeowner insurance.

The contents claim is another issue I've seen come up regarding that particular fire. Following the disaster, the California Department of Insurance made a request that insurance companies pay the limits of insurance outright for total losses; however, some carriers, State Farm in particular, paid the majority of the contents limit and require a complete inventory before payment in full will be issued.

Is this what you're asking?
 
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Yes,
The contents claim is another issue I've seen come up regarding that particular fire. Following the disaster, the California Department of Insurance made a request that insurance companies pay the limits of insurance outright for total losses; however, some carriers, State Farm in particular, paid the majority of the contents limit and require a complete inventory before payment in full will be issued.

Is this what you're asking?

Yes, His ins co paid the limit on his contents and never asked for an itemized account. He is ok with the $$$ for the dwelling, and, still owning the lot. He made out like a bandit on the contents and he knows this. I believe his contents check was 400K+.
 
The Replacement Cost of the house has nothing to do with what it can be bought or sold for.

If he got $400,000 for the contents and $800,000 for the house (totaling $1,200,000), that's about right since Coverage B - Contents is typically 50% of Coverage A - Dwelling, except with Replacement Cost coverage on Contents where the percentage could be as high as 75%.

With Replacement Cost coverage on Contents he could even be entitled to more if he was just paid the ACV (depreciated value) up front. Once his actual cost to replace his contents exceeds $400,000 he can submit the receipts for like kind and quality and get more money.
 
So currently, my friend and his wife and stepdaughter are renting an apartment. The rent is being paid by the homeowners ins. Apparently, the policy pays for 12 months of dislocation, plus, another 12 months because the fire was classified as an federal disaster.
Can my friend just keep getting his rent paid without moving forward on building a house on his cleared lot? What he would like to do is this. Continue to collect dislocation rent until this time next year(stepdaughter graduates from High School). Can he do this? Take the $$$$ and run? He wants to move out of the area. He doesn't want to build a house and then sell.
Thanks for all comments.
 
Generally, the loss of use coverage, or additional living expense coverage as it's more commonly known, covers those expenses during the 'period of restoration.' In many cases, once it's determined that the insured is either not rebuilding or is selling the property, those benefits will cease. However, recognizing that it was classified a disaster (thus the extension on ALE and the payment of policy limits on contents), the insurance company may be agree to pay that expense.

I've known of a few cases, only a few, where the insured negotiated with their adjuster for additional living expenses (rent, utilities, etc.) for an agreed amount of time and the insurance company paid those in advance. Again, this is rare, since additional living expenses are almost always paid on an incurred basis, meaning the money has to be spent first.

He could make a formal request for the full amount of policy limits to be paid using a proof of loss, which would include the total of the building, contents and loss of use, in exchange for a release of all claims. You never know until you ask. It's been done.
 
Can my friend just keep getting his rent paid without moving forward on building a house on his cleared lot?

Probably not.

According to the HO-3:

Payment will be for the shortest time required to repair or replace the damage or, if you permanently relocate, the shortest time required for your household to settle elsewhere.

"Shortest time" can be open to interpretation and your friend may find himself cut off at some point if he has made no reasonable effort to rebuild or permanently relocate.

I don't know how that federal disaster thing works because it's not part of the HO-3. Maybe he has some optional form that does that. He should read it.

As a former property claim rep I would want evidence of an intent to rebuild (plans, permits, breaking ground, ongoing construction, etc) especially since the potential payout could be 20% of Coverage A = $160,000 (assuming $800,000 on Coverage A).

I always paid my customer's what they were due, but didn't give away money for nothing.
 
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