FAQ - Frequently Asked Questions | Property Damage Recovery Law Firm

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Southern California commercial and residential property damage claims recovery law firm

FAQ?

Common

Questions

I. Mitigation

Q: The law says in the event of damage, I have the duty mitigate. What is this term?
A: Duty of mitigation means that you must take a reasonable effort to stop incurring further damage.
For example; if you have a water leak, you need to shut off the main line and call a plumber to fix the
Leak before turning the water back on. In most cases you are advised to use an emergency care
provider with special equipment to dry out effected areas after your plumber has fixed the problem.

Q: Am I responsible for payments to plumbers, and emergency care providers?
A: Most policies do not cover the cost of plumbers, but they do cover the cost of emergency care
providers only if your loss is a covered loss under your policy. This means if insurance adjuster
determines that your leak is a long-term leak which most policies do not cover, then you are responsible
for the bill.

Q: What is the average cost for emergency care provider’s bill?
A: The bill can easily be thousands of dollars based on the level of leak and ensuing damage.

Q: Since I have to mitigate by law, and if I am not covered, what can I do to lessen the bill’s burden?
A: For those losses that we are called in immediately, due to experience, my experts and I will know if
coverage exists. On many occasions where I was called in and coverage did not exist, I have been
successful to have either insurance companies pay for the bill or we used vendors that drastically
reduced their bills.

II. Scope of Damages

Q: How is this determined?
A: Insurance uses either their own adjuster / employee or so called independent third-party adjusters to
determine the extent of damages in the affected area. It would be naïve to assume these experts will
assess the full extent of your loss. In fact, in a few court cases during the deposition it was revealed that
certain adjusting company had done over 1200 estimate for the carrier. I try not to be cynical but
people tend to benefit their employer! I have even come around cases where the adjuster did not have
the expertise to realize the extent of damages. This is a complex process and not all adjusters are
experienced enough to document full extent of loss.

Q: How does my office helps to remedy this problem?
A: During my criminal practice in the first 5 years, I frequently seek advise from ex prosecutor because
there was value in advice from same people that oppose you. Hence, in my current practice I use
experts that been employed by insurance companies in the past. In addition to obvious values for this, I
find it very hard for insurance companies to question or discredit estimate from people they use or used
in the past.

III. Loss of Use

Q: If my place is not habitable what are my rights and expectation for rental unit for temporarily stay?
A: Most policies are written in a way that you are entitled to a rental similar to your own place
reflecting a close proximity to work and school if your property was situated as such. There is usually a
fixed dollar amount set forth in the policy. Therefore, for claims that may take longer to resolve, it is
important to pace your rental occupation.

I had a case with limited loss of use amount. The nature of the case demanded that homeowners
should stay in rental while the restoration proceedings for asbestos was in process, and then down the
line, they would have to stay out in rental again during rebuilt process. Due to limited rental ceiling, I
made sure the homeowners were moved out, then moved back in, and then again moved out.

I know this was added stress for my client, but if I had failed to notice the limits on the rental, they
would have had used it all up in the first stage, and on the next stage, my clients would have had to
incur the cost.

IV. Personal Property

Q: I have valuable rugs and antique furniture. Insurance adjuster wants my carpets washed, and they
will not pay the full value of my furniture. What can you do for me?
A: Personal properties require use of experts as much as your real property does. In such situation or
even if you have property that are not antique or luxury pieces, in order to avoid underpayment, it is
always prudent to use experts to determine your loss. However, it is an added burden for homeowners
to bare the advance payment to the experts where they are not even sure if the report will be accepted
by the insurance company.

Due to my experience, we have a great deal of information as to what will be a coverable loss, and I
have the attorney license to enforce your right. As such, I am confident in advancing the costs for the
experts, and recovering the costs on your behalf.
Remember, asbestos, contaminant, and dark water from bathroom & Sewer backups are deadly to
valuable furniture, and replacement at full appraised value is recommended.

Q: Why is my insurance adjuster depreciating my contents items when I have a replacement cost
policy?
A: Because there is language in your policy that lets them do that. For most items, once you replace
and submit proof, they must pay you the difference between the depreciated amount they paid and
what you spent.

Q: You mean I have to pay out of pocket before I get reimbursed?
A: That’s right.

Q: Why such a complicated process?
A: The process deters fraud and allows your insurer to pay out less than they really owe. Most people
don’t end up replacing everything lost so it works to the insurer’s advantage.

Q: What are the rules for how much and which things get depreciated?
A: Depreciation should be reasonable, not excessive. Depreciation is subjective. The IRS publishes
depreciation guides; United Policyholders publishes a depreciation guide, and industry publications offer
depreciation guides. The bottom line is you need to resist excessive depreciation by arguing back and
providing proof of the value and condition of your lost or damaged items.

Q: Are there laws or regulations that relate to depreciation?
A: This varies state by state. California, for example, has the following law:
Fair Claim Settlement Practices Regulations: §2695.9 (f) When the amount claimed is adjusted because
of betterment, depreciation, or salvage, all justification for the adjustment shall be contained in the
claim file.

Any adjustments shall be discernible, measurable, itemized, and specified as to dollar
amount, and shall accurately reflect the value of the betterment, depreciation, or salvage. Any
adjustments for betterment or depreciation shall reflect a measurable difference in market value
attributable to the condition and age of the property and apply only to property normally subject to
repair and replacement during the useful life of the property. The basis for any adjustment shall be fully
explained to the claimant in writing.

(1) Under a policy, subject to California Insurance Code Section 2071, where the insurer is required to
pay the expense of repairing, rebuilding or replacing the property destroyed or damaged with other of
like kind and quality, the measure of recovery is determined by the actual cash value of the damaged or
destroyed property, as set forth in California Insurance Code Section 2051. Except for the intrinsic labor
costs that are included in the cost of manufactured materials or goods, the expense of labor necessary
to repair, rebuild or replace covered property is not a component of physical depreciation and shall not
be subject to depreciation or betterment.

Q: How do we resolve a dispute with the adjuster/insurer over depreciation?
A: The same way we resolve any claim-related dispute:
Make a specific request for what our experts value with documentation and enforce it by reaching to
team managers and even higher up. Since I have a radio show where I educate the public about what I do and insurance policies, on one case with Mercury insurance during a dispute about the unfairness of Mercury’s 7-days limit for leak discovery, I simply stated that I will talk about this on my show. That landed me an appointment with one of their top district managers to resolve the dispute in a closed set meeting.
At that time some of Mercury’s home owner policy had a 7-days limit during which you would have to
discover a leak and reported. If you failed the limit, or their adjusters could make a reasonable case that
your leak existed over 7 days, they would deny your claim.

Q: Is depreciation set in stone?
A: Depreciation is negotiable. Insurance adjusters use their own personal views on the value of items
plus guidelines on depreciation provided by their employer. It is hard to pin down an adjuster on how
they valued your damaged or destroyed items. But these values impact your pocketbook so they are
important to challenge if they are unfairly low.

Q: What is the effect of item’s age for this process?
A: Age isn’t everything. Even if an item was old, it may be in good to excellent condition: Depreciation
should be based upon the “Remaining Life Expectancy” of an item – not necessarily the age of the item

Q: Is ACV deductions same on everything?
A: No. The furniture in your guest room should be depreciated less than the furniture in your master
bedroom because it was used less and was in better shape. – The Replacement Cost and the Actual Cash
Value of some items are the same.

Q: Is all my personal property subject to depreciation?
A: No. Many items should not be subject to any depreciation. Antiques, fine art and jewelry, computer
media (CD’s, etc.), software, framing, masonry, concrete, insulation, light fixtures.
Some items depreciate faster than others. Examples: electronics, soft furniture, clothes and shoes
depreciate faster than hard furniture, washer/dryers, etc.

Common Frequently Asked Questions

Some questions tend to me more common than others. This section of our web site is to help answer some of the questions we get asked most frequently. If you don't see the answer to your question with an answer here we would love to hear from you. click to Contact Us for a free consultation.