Please Help With Fire Insurance Claim

Mar 25, 2016

  1. esox

    esox New Member

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    Really need some advice with my fire claim up here in Canada.

    Lost my house and everything I've ever owned in a fire over a year ago and I've been hit with road block after road block preventing a rebuild. A rebuild where there's about $250,000 in premium clauses I had with my policy.

    Just to quickly elaborate on the aforementioned clauses, my home was on a waterfront property and is only accessible by a narrow 250 foot long driveway making it impossible for heavy construction vehicles to traverse. The house was also over 40 years old. So knowing the age and logistical issues that are surely to arise if a rebuild was ever required, I felt it prudent to include a number of clauses in my policy to deal with these difficulties. This would include additional living expenses clause since a rebuild would take longer than usual, a by-law clause to account for the age of the house, and finally, the option of allocating unused content insurance towards the rebuild knowing the likelihood of cost overruns.

    Hopefully someone here could answer some questions for me.

    1) Is it normal for the insurance company to require the homeowner to conduct a thorough investigation with all the different municipal/township by-laws and any conservation regulations to ensure a rebuild could proceed?

    The insurance rep said that if I did not get approval, they could not proceed with the rebuild. Didn't even know where to begin with this task, but it would eventually take me 2 weeks to get the go ahead from the township regulators.

    2) Is it normal for an insurance company to have a 4th party contractor be involved with the rebuild?

    It seemed kind of redundant when the insurance company hired a 3rd party demolition contractor who then hired a 4th party demolition contractor to actually work on the claim. Had to sign the same paper work twice.

    3) Why did the insurance company ask me to waste all my time doing all that research when I learned that the 4th party contractor was responsible in the first place for obtaining the required permits for my rebuild?

    This is where things get really squirrelly. The 4th party mentioned above was obsessed with buying the burnt remains of my house and property as is. He said he wanted to park his big camper after all the debris was removed. He made multiple offers to buy and when I declined, he ended up telling me that the township denied the permit for my rebuild because of new conservation regulations that affected waterfront properties. He even said that once the rubble was removed, we were not allowed to rebuild anything making the property useless. He offered to buy my property again but at a lower price.

    This made no sense because I already got the go ahead to proceed and the issuing of a permit was just a formality. I revisited the helpful folks from the township who gave me the go ahead. It turns out the 4th party contractor went to the departmental head and stated on the permit application I was planning to move the new house 15 ft closer to the shoreline. Doing this would have been insane making the house dangerously close to the water. I notified the insurance company of this conflict of interest and that the permit was denied and they did nothing. I ended up having to waste even more time assuring the township I wasn't planning to move the new house closer and they issued the permit to that 4th party scumbag.

    Since September, the insurance company has stopped paying for my rent citing that I refused to meet with the agent to discuss the next steps. That was via email, but verbally on the phone, the agent says I must take possession of payment for the depreciated value of my house and sign off on related documentation during our planned meeting. Only after that he will proceed with rebuild talks. I’ve repeatedly asked for a copy of this documentation for me to review, but it’s never been provided. As of the end of this month, I would have drained all my savings paying both rent and the mortgage on a house that no longer exists.

    So I guess question 4 is -

    Why is the insurance company so insistent on me taking this payment when I’ll have to give it right back. I made it clear that I needed them to make all the arrangements.

    Asking around the office, I’ve learned I have 2 co-workers who also lost their homes in fires over the past 10 years. Neither was ever asked to run around to research by-laws and regulations so a rebuild could proceed. The construction company that rebuilt their houses did all of that. Neither were ever asked to accept payments for the depreciated value of their homes because their insurance companies handled all the necessary arrangements for the rebuild so there was no reason for them take possession of this payment.
    esox, Mar 25, 2016
  2. djs

    djs Super Moderator Moderator

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    I can't speak to Canada claims, but in the US, what they are doing isn't that strange. Okay, the contractor bit is way out to lunch, but that really isn't the insurance company, that is the contractor trying to do something underhanded.

    Fire the contractor, today. At least in the US, you hire the contractors, the insurance company may recommend some, but they don't require you use a particular one.

    Again, in the US, it is very normal for the insurance company to pay the ACV (actual cash value) upfront to you so you can hire the contractor and pay them. After the work is complete, they write another check to pay the difference, which again, you usually sign over to the contractor. There are clauses in the policy contract that state they only pay full value when the work is done.

    Having a house burn is a very emotionally draining event and I can understand the frustration of the 'process'. Your agent and adjuster should be helping to walk you through this and it sounds like they are, but you have a complication of the contractor that is causing problems.

    Why did the insurance company want to have you check to make sure you could rebuild? Not sure exactly, but my guess is your adjuster knows the town very well and was concerned based on what he knew of current requirements. In the end, it sounds like he may have done you a favor, since you knew the contractor was blowing smoke over your debris!

    Insurance companies NEVER handle all of the necessary arrangements. They write checks. From time to time, they will help with arrangements, but that (unfortunately sometimes) is not their job. Their job is to write a check. Once you understand that part, it is actually easier to get things done since you know what to expect.

    djs, Mar 25, 2016
  3. esox

    esox New Member

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    Thanks for the reply Dan !!!!

    Sorry, I talked to my co-workers again for some clarification. Their agent hired a contractor that took care of everything and they billed the insurance company. The only checks they got were for contents and living expenses.

    But here's an update.

    For the first time since the fire, my agent said they will proceed with a rebuild. This was after I repeatedly turned down his offer of a cash payout. He kept suggesting that it might be a better idea for me to find out what my property was worth since 2 of my neighbors have shown interest in buying it. The insurance agent kept insisting their cash offer and what I'd get for my property could turn a good profit for me.

    I declined their offer.

    My insurance company now says I need my bank to approve the rebuild since they hold the mortgage. In fact, they say the bank will be controlling all the money for the rebuild and approve what the rebuilt house will look like. Ultimately, they will be overseeing everything related to the rebuild

    Does this make sense? Apologies for being such a newb at this because it's my first house fire. I would think I should have some say with what the house looks like since I'll be living in it, and not my bank.

    In any event, I went to my bank to talk to their mortgage officer as the agent instructed and they had no idea what to do. She got the bank manager involve and he was scratching his head. Their concern was overseeing and controlling all the finances of the rebuild was no small task and they didn't even know where to begin. Right now they're calling all the different divisions of the bank making enquirers because everyone they've spoken to so far is clueless.

    In the morning , I'm going to ask if either co-worker still had a mortgage at the time of the fire because the agent indicated both their homes would have been fully paid for if there was no bank involvement in their claims.
    esox, Apr 13, 2016
  4. John Grosse

    John Grosse New Member

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    I too think so the 4th party contractor was responsible.