The Rodeo-Chediski Fire in east-central Arizona is the worst forest fire in Arizona to date. The City of Show Low, Arizona was in danger, but never did burn. Peter Romero helped individuals with dwellings on private land which were lost in the fire. This fire was especially large, not just because it was the hot dry month of June in Arizona, but because it was actually two Forest Fires which merged. The Rodeo fire and the Chediski fire. One fire was set by an arsonist, the other by a stranded motorist. These two fires converged with perfect fire conditions allowing for flames to reach over 300 feet into the sky.
This is a reprint from the "Pine Graphics Weekly" by James Harrles about his opinions and expressions.
This is not intended to be a thorough discussion of fire insurance and how it affects our neighbors. These are rather a few informal thoughts, opinions and expressions of things I have learned over the past forty years.
First, the process of settling claims is sometimes done by the insurance company adjusters with sympathy, courtesy and fairness. One of my helpers lauds State Farm's representatives for their treatment of her troubles.
But the resolution of claims arising from fire losses can be a contentious, adversary type process where the insurance company is trying to "win" by paying the least number of dollars possible and the injured insured is trying to win by extraction the biggest number of dollars possible. Of course there are many situations in between where the homeowner feels that most of the treatment from the insurance company is fair or "O.K." but some points bother the insured.
Like with all civil disagreements, the process of resolving the amount of money owed by the insurance company can involve having the disputed issues ruled upon and decided by an arbitrator or by a court.
Although it may sound strange coming from me, I believe that only a small percentage of lawyers are competent in the area of fire insurance coverage. To be sure, most lawyers can read and interpret a contract and most lawyers know what evidence to seek and present. But fire insurance loss claims is a fairly special area where general legal skills don't help as much as they do in other controversies.
Most fire insurance policies are based upon a model form policy. This allows the ordinary guy to shop the price for insurance premiums without getting too much involved in comparing apples and oranges.
There are public adjusters who work on a percentage fee basis for home owners and business owners. Some of these persons are in my humble opinion, more skilled, more knowledgeable and more effective than most lawyers would be.
One of the reasons why public adjusters can be the best tool is that simply reading your policy with a good understanding of ordinary English does not clearly or reliably tell you what items are covered and what items are not. Words in the policy acquire in the fire adjusting business unique secondary meanings. Some of the words become "words of art". If you work as an adjuster or as an attorney repeatedly handling claims under fire insurance policies, you learn better more accurate definition of what is owed by the insurance company than you would gather from day to day use of ordinary English. You also learn "customs and usage", i.e. what an insurer will tolerate in a claim and what they will react negatively to.
The best public adjusters for handling disputed claims typically say to perspective customers, "You go ahead and get the best figure you can from your insurance company as to what they will voluntarily pay you. Then come to me without setting your claim. I will work for ‘X' percentage of what I am able to get for you that is over and above the offer available to you when I start work. If I can't improve the recovery for you, I don't get paid.
I don't have the brass to attempt to give any comprehensive discussion of specifics. But here are a few comments I have been asked "Can I take my fire insurance loss money and not rebuild but rather buy in another location and either build on or buy an existing house." The answer is yes, but the amount of money the insurance company may be willing to pay may be much less that they would pay if you were rebuilding your original home." An insurance agent told me that if the policy requires them to pay "replacement Cost" they will pay the current bid price of the fair market value of labor and materials to restore your home on your site, but if you don't rebuild, they will establish the fair market value of recreating your home and then deduct from that figure both land cost and the percent of replacement cost that represents the portion of the usable life of your house that had been consumed or used up when the fire consumed.
A public adjuster told me yesterday that there are four different formulas that can be used to compute "replacement cost" some favoring the insurer, some favoring the insured. This adjuster told me some examples of ways to drive up the insurance settlement if you buy an existing home rather than rebuilding as, for example, if your destroyed structure had amenities that are now found in the replacement home you want to buy you should be able to drive up the settlement figure by taking depreciated replacement number the insurer offers and adding the fair retail value of adding to the replacement home the feature or amenities that you enjoyed in the destroyed home.
If the insurance company believes that your home was "underinsured", i.e. that you were buying insurance coverage in a figure substantially less than the true value of the property, the insurance company takes the position that it owes the home owner that fraction of the true loss that is produced by deducting the percentage of the true value of the home that was not declared by the home owner in deciding how much fire insurance coverage to buy.
The procedure for presenting and resolving claims are somewhat technical and not something that the ordinary guy should jump into without giving it a lot of thought. For example, the process is based upon filing with the insurer papers called "Proof of Claim" which may be elaborately supported by affidavits, letters, bills, etc., including the testimony of special contractors engaged in applicable skills and perhaps the testimony of a general contractor to establish how the loss figures are arrived at. Once the proof of claim is filed, the insurer has a relatively brief time within which to challenge and counter on specific items of damage. If the proof of claim is no controverted within the brief, specific time provided, the insurer (or the insured) may be bound by the uncontroverted figures and formula proposed by the opposing side.
Public adjusters also take on a process to resolution FEMA claims for private parties and businesses.
If the dispute is not resolved by compromise agreement, it is my recollections that most policies require arbitration i.e. presentation of the proof to a neutral, qualified third party for that person to make decisions resolving contested points. Ultimately a claim dispute may end up in the court system. I believe that at that point, the issues are whether or not the proofs of claims and the arbitration establish the amount that the insurance company owes. There is no "trial de novo" where a homeowner can start from scratch and simply ask the judge to fix the amount the insurer owes from photographs, testimony, etc. ignoring the proof of claim and arbitration. So what the homeowner does, says, writes, or presents to his insurer becomes the "nuts and bolts" for deciding any lawsuit.
I hope these comments are of some help to those of my neighbors who are trying to grapple with insurance coverage problems
The above comments are the opinions of James Harrles, Pine Graphics Weekly Friday, July 19, 2002