I recently saw on a
Facebook group I belong to advice for victims of the California fires and how
they can maximize their insurance claims. The advice was dreadful. It included,
“Make from memory the most detailed list you can of every item in your house
that was destroyed, and its value.”
This is terrible
advice.
One of my
specialties as an attorney is representing people with property damage claims
against their insurers (Massachusetts only). I also represent insurers in
these losses, more on this at the end. I
have seen from both sides people who have suffered this type of terrible loss who received this
advice and got completely caught up in futilely trying to make a complete
inventory of their destroyed personal property and its value on their own. Of
course, because these items represent their life and have huge value to them,
and they get lost in that.
The good news is:
there is an entire profession devoted to helping people with this type of
insurance claim. Their job is to advocate with an insurance company for the
insured for the value of the property damage loss, including personal property
claims. They have specialists who will make lists of personal property
inventory and value it. Yes, you will
need to work with them and provide them the information, which may include lists,
but they will help you and they will provide the valuation.
They are called
public adjusters. They get paid by contingency fee, typically ten percent (at
least in Massachusetts; maximum percentage is set by state law), so cost
nothing up front, and for any major loss are well worth the cost because you
will recover more working with them even with their fee than you would trying
to do it yourself, and they will act as a buffer between you and the insurer
and reduce your stress in this aspect of your loss significantly.
In all honesty, some
public adjusters are terrible and some are great (and most are in between). As
with any professional doing something major for you, you will want referrals if
possible. Meet with several. Ask for references. Google them. But a good public
adjuster will save you time and aggravation and help you move forward. Even a
not very good (but not terrible) public adjuster is better than you trying to
do this yourself.
My advice for anyone
who may need to evacuate but is currently safe (and everyone else, do this
while you are thinking about it): Go around your house and take pictures of
everything. The exterior walls. Everything you own inside. Appliances.
Bookshelves. Open your closets, your cabinets, and your drawers and take
pictures. (Not of each item, but of the inside of each drawer. I am not trying to make you crazy here. Maybe
individual photos of items you own of high monetary value.) Hopefully you will
never need to look at them, but if you do need to show what you owned, this is
a good way to do it. (I do this every couple of years. It takes 30 minutes or
so.) You can hand the photos to the public adjuster, who can use them as a
basis for their inventory (along with conversations with you).
Why is it terrible
advice for you to try to inventory and value your own goods? Because unfortunately sentimental value has
nothing to do with insurance coverage.
The items you love the most – your photo albums, the souvenirs you
picked up on your travels, your paperback copy of The Lord of the Rings trilogy
you have carried around since you were 12 (yes I’m projecting here) – you will
obsess over their loss, they will make you sad,
you will mourn them, all of which is understandable, but they have little
value in an insurance claim. Your ergonomic
chair in your home office that you never think about may be worth
something. You will obsess over that as
well. Even if you don’t, your lists will
not be put together in a way that an insurer can easily work with. (You will also need to understand the difference between actual cash value and replacement cost value. Actual cash value broadly speaking is the value of the item you own today. My beloved copy of Lord of the Rings is falling apart and has no value; even a thrift shop would just throw it out. But its replacement cost value is $26.38, because that’s what I would spend for it on Amazon. I will get that amount from the insurer if I timely actually purchase a new copy.) This will take your attention from where it
needs to be, which is working with a contractor to rebuild your house within the
amount the insurer will pay.
I have seen advice that if a house suffers a total
loss don’t waste your ten percent on a public adjuster because you will get
your policy limits. This is an oversimplification. There are various coverages that a policyholder
may not know about on their own, that insurers may ignore. Everything
from code upgrades, which is huge (you have to rebuild to current code, which
is an extra expense and an extra coverage but the amount has to be proven based
on local codes) to landscaping coverage. (These coverages are often but not always
in addition to your building coverage limit.) Again, the difference between actual cash value that you get paid up front and replacement cost value, that you get paid after the rebuild is complete if you have that coverage,
can be significant, and you need ACV to pay your contractor to do the work.
(Some contractors understand insurance claims; most don’t — they just want to
build houses.) And don’t forget loss of use coverage, which is rent while your house is being rebuilt. (In my experience public adjusters generally don’t charge their percentage for this but if needed they will help you advocate for a suitable place to live.) With personal property
(your stuff) you have to show the value of your destroyed property, which may
or may not reach the coverage limit. Many public adjusters are not interested
in coming into a loss late. So, if you are someone who can read and understand
an insurance policy and advocate effectively for yourself with the overworked
insurance adjusters who will be flooding into California from other states, and
you have the time and emotional wherewithal to do this on your own, sure, go
for it. As an attorney in the industry, I would 100 percent hire a public
adjuster in this situation.
Very important note: I don’t want to make it sound like I think insurers
are evil. Quite the opposite. I
represent insurers as well as policyholders, and many insurance adjusters are
wonderful people with integrity who do their absolute best to be fair. But if you get off on the wrong foot with a
claim it can be very difficult to course correct. Some insurance adjusters will advise you not to hire a public adjuster. Some will be happy if you do because they know they will receive information in a form that is easiest for them to analyze. Ultimately the choice is yours, but you know where I stand.