Need for Reasonable Extensions of Insurance Policy Deadlines

Steve Price 2620 Brogans Bluff Drive

(Total Loss)

On behalf of all families affected by the Waldo Canyon Fire

Need

• Overview of issues

• General and specific examples provided

• Desired outcomes

Perceived Obstacles to Settlement

• Delay – Insufficient contact info., changing personnel

– Unreasonably slow response times from Insurer

• Deny – Arbitrary denial without adequate reasoning

– Denial contrary to policy terms

– Often requires objection, seek reasoning, new data

• Ignore – No response to specific requests or questions

Coverage A & B – Dwelling & Contents

Actual American Family Policy for Illustration Purposes Only

Coverage C – Loss of Use/ALE

Actual American Family Policy for Illustration Purposes Only

Fair and Equitable?

• An insurance company will never pay one penny more than what is owed under the terms of the policy.

Coverage A (Dwelling) - Policy Limits

Dwelling Limit = $459,800.00

Index Amount (inflation) = $10,895.74

Total = $470,695.74

Cap Amount (HO5 @ 20%) = $94,139.15

Total Dwelling Coverage = $564,834.89

Insurance Company - 07/24 & 10/24/12

RCV = $541,588.44

Depreciation = $184,102.69 (34%)

ACV = $357,485.75

RCV Final = $691,999.64 (28% more $) Depreciation Final = $167,775.95 (29% less) ACV Final = $524,223.69 (40% more $)

Actual Negotiated/Settled Claim for Illustration Purposes Only.

3 months, 28 days to negotiate a 40% increase

6 months, 29 days to receive (almost) final payment (1/24/13)

8 months, 2 days to repair or replace

5 months, 2 days to repair or replace (06/26/13) and

still don’t have $$$

$166,737.94 more than the first offer

General Insured Delay Issues

Grief

Fear

Worry

Stress

Health

Money Job

Clothes

Food

Shelter

Transport

Communication Intimidation

Frustration

Kids

School

General Delay Issues

• Accessing the neighborhood & our homes

– Mandatory evacuations in place

– National Guard and CSPD roadblocks

– Proof of residence for neighborhood access

– Scheduling access (work, health, etc.)

– Scheduling and holding on-site meetings with Adjustor and their experts

Insurance Policy Issues

• Obtaining underwriting documents (certified copies of underwriting documents to ensure appropriate underwriting and value estimating methodology)

• Obtaining the policy, riders and supplements (delays and mistakes getting certified copies of policy, riders and supplements)

• Delayed, sporadic, or lack of communication (Adjuster & Experts)

General Delay Issues

• Identifying and documenting scope of loss

• Identifying reputable consultants/contractors

• Obtaining detailed bids acceptable for claims purposes

• Retaining consultants & contractors – Many are too busy

– Requires substantial monetary deposits

– Requires insured to obligate prior to receipt of insurance proceeds

General Delay Issues

• Testing and Monitoring – Can require multiple contractor/engineer visits

– Some tests take time to administer

– Some test results take time for: • Processing

• Documentation

• Delivery

• Review by Insured and their experts

• Delivery and review by Insurer

• Delayed response (pro or con)

Other Unavoidable Delays

• Weekends

• Holidays

• Weather

• Illness

• Lender Issues

• HOA meeting schedules

• HOA quorums

Coverage A - Dwelling

• Disagreement over Replacement Cost Value – Amateur Homeowner vs. Professional Insurance Co.

• Insurer has volumes of experience and employs methods that can overwhelm, frustrate and intimidate

• Insured has limited resources (time, money, technology)

– Obtaining bids from qualified & reputable firms

– Xactimate is an insurance industry standard (room-to-room component breakdown) versus builder bids (breakdown of costs by trade; framing, roofing, mechanical, plumbing, electrical, concrete, etc.)

– There is no “insured” industry standard, only a bid or cost-plus proposal and what builder’s typically provide

Coverage A - Dwelling

• Disagreement over Depreciation

– Component depreciation by room vs. trade breakdown (70 page Xactimate summary from insurer*)

*Actual Estimate of Loss for Illustration Purposes Only

100% depreciation on 3-year old

remodel

Coverage A - Dwelling

• Disagreement over Actual Cash Value – Requires comprehensively documenting RCV

– Requires documenting and negotiating depreciation

– Insurers argue depreciation is an “industry standard” when, in fact, there is no standard

– Requires considerable research and documentation by Insured, versus third-party experts employed by the Insurer that are paid from premiums paid the Insured

Depreciation Discrepancies

Depreciation

Ref. # Item Description Percentage

1 46 Vanity top 90.00% others reflect 15%; perfect condition

2 49 Toilet Seat 100.00% others reflect 33%; perfect condition

3 55 Medicine cabinet 90.00% Porcelain covered steel; perfect condition

4 56 Mirror 45.00% others reflect 28%; perfect condition

5 62 Custom shower door 72.00% Perfect condition

6 78 Seal/prime then paint 100.00% Others reflect 20%

7 85 Mirror 45.00% others reflect 28%; perfect condition

8 95 Speaker package 100.00% TheBOSE speakers worked perfectly fine

9 96 Hot Water Heater 33.00% Replaced during remodel

10 109 Window Blind 60.00% Installed during remodel

11 112 Mirror 45.00% others reflect 28%; perfect condition

12 117 Seal/prime then paint 100.00% Others reflect 20%

13 118 Vanity top 90.00% others reflect 15%

14 125 Shower base 100.00% Perfect condition

15 126 Custom shower door 72.00% Approximately 2 years old

16 207 Dishwasher 56.00% Installed during remodel

17 208 Cooktop 38.00% Installed during remodel

18 228 Fireplace 45.00% Annual maintenance; perfect condition

19 318 Medicine cabinet 90.00% Porcelain covered steel; perfect condition

20 319 Mirror 45.00% others reflect 28%; perfect condition

Actual Comparison of Depreciation Estimate by Insurer for Illustration Purposes Only

Coverage B – Contents

Price RCV Price ACV AmFam AmFam

8/28/2012 8/28/2012 10/11/2012 10/27/2012

CONTENTS TOTAL B4 S/H/DP/T $597,803.97 $437,641.34 Replacement Cost (RCV) $490,473.48 $573,191.84

SHIPPING (including international) $29,890.20 $21,882.07 Sales Tax $35,741.12 $41,862.31

HANDLING (estimate on 50%, excl. Refrigerators) $14,865.35 $10,861.28 Replacement Cost plus Sales Tax $526,214.60 $615,054.15

DELIVERY/PICK-UP (estimate) $29,890.20 $29,890.20 Less: Depreciation $231,592.24 $258,575.50

SALES TAX (except on food) $44,001.42 $32,149.39 Actual Cash Value (ACV) plus Tax $294,622.36 $356,478.65

SUB-TOTAL S/H/DP/T $118,647.17 $94,782.94 Less Amount In Excess of Limits $0.00 $0.00

n/a Less Deductible After Insured Contribution $0.00 $0.00

n/a Estimated Net Payment $294,622.36 $356,478.65

n/a (settled at) Less Advances $0.00 $0.00

GRAND TOTAL CONTENTS $716,451.14 $532,424.28 Estimated Net Payment less Advances $294,622.36 $356,478.65

81%An increase above Insurers first ACV of

Insured’s estimate of RCV

Insured’s estimate of ACV

Insurer’s first estimate of ACV

Insurer’s second estimate of ACV

Actual Comparison of RCV and ACV of Contents Claim for for Illustration Purposes Only

Negotiations & payment took 4 months, 26 days

Coverage C – Add’l Living Expenses

• Most Insurers deny pre-payment of ALE to cover long-term liabilities (lease payments)

• Insurers deny claims for relocation necessitated by partial damage or health issues

• Delay, deny or ignore requests to cover storage space after downsizing

• Insurers request unnecessary information that promotes frustration and anxiety

• Extremely complex and cumbersome process

Construction Statistics

Source: Pikes Peak Regional Building Department, 01/25/13

Construction Statistics

Source: Pikes Peak Regional Building Department, 01/25/13

95 New Residential Permits of 347

Destroyed (27%)

PERMITS

CODE DESCRIPTION ISSUED

101 Residence 89

102 Townhome 6

434 Demo/Debris/Damage 245

645 Wrecking 299

Total 639

Desired Outcomes

• That the Colorado Division of Insurance and our elected representatives:

Compel Insurance companies to extend all deadlines by at least

one (1) year