For over 20 years, I’ve represented homeowners in front of large insurance companies. I spend my days assisting my clients in the preparation, presentation, negotiation, and adjustment of their insurance claims. Today, I’m sharing an experience I had while handling a smoke damage claim in Calabasas:
How did you first become involved with this claim?
I was contacted directly by the homeowner for a particularly complex claim. His home sustained smoke and fire damage after a severe brush fire. Negotiations took over a year to complete due to the intricacies of the homeowner’s coverage.
What kind of coverage did this homeowner have?
He was a composer for film, and he operated his business from his home. He had business coverage, loss of income coverage, homeowner’s insurance, and special equipment coverage. It was advantageous that he maintained these comprehensive policies; however, it took time to allocate the damage among the policies. Determining loss of income and obtaining payment for the smoke damage was particularly difficult.
Why were those things so difficult?
In terms of loss of income, the business insurance provider made an initial settlement determination. That determination was sent to the insured’s business accountant for review. His accountant discovered that the amount was too low to cover the extent of the lost income. He reviewed the homeowner’s finances and collected substantiating documents before providing an alternate estimate to the company.
As for smoke damage, insurance companies always tend to drag their feet. Of course, the smoke damage was a direct result of the fire damage, which was a major coverage component of the homeowner’s policy. Although it was covered loss, the insurance provider contested the specifics of the claim.
What kind of smoke damage occurred?
The homeowner’s duct system was badly damaged. The AC was on while the fire was active, which sucked in the smoke through the vents. From there, the smoke entered the ducts, which were built into the walls. It also entered the furnace, which sustained so much damage that it could not be cleaned to the degree necessary to ensure healthy clean air circulation. To fully restore the home, they needed to open the walls and replace both the ducts and furnace.
Is this level of smoke damage common?
Smoke damage varies depending on the contributing fire and the distance of the flames. In this case, we were dealing with a brush fire in the back yard. To combat brush fires, planes often release flame-retardant mixtures. These mixtures are primarily made of water and chemicals, but they are toxic. When they come in contact with fire, the heat causes them to evaporate like a mist, which can settle into metal and cause corrosion. This smoke damage was what you might expect following a fire of that magnitude.
How was the smoke damage evaluated?
Even in cases of more visible damage, it can be difficult to get the insurance payout necessary for repairs. In this case, we brought in many experts. The smoke damage was examined by multiple third parties until an agreement was reached. At this point, it looked like negotiations were over. Unfortunately, it took a few months to fully resolve the claim.
What component of the claim caused the delay?
During the last phase of negotiations, the insurance company received an invoice from the insured’s accountant. If you’ll recall, the accountant was responsible for the lost income calculation the insurance company used. They were billed for the time the accountant spent putting together that estimate. The insurance provider refused to pay for the accountant’s time and suggested that the cost should fall to the insured. I argued that this was unethical. The company relied on the accountant’s estimate to do their job; therefore, they should compensate him for his time.
Has this claim finally been resolved?
After two years of negotiations, we finalized settlement amounts for all the homeowner’s policies. The settlement covered the full extent of his losses. Although the process was complicated, this case really illustrates the value of comprehensive insurance.
Remember, it’s important to insure what’s important to you! For example, this homeowner obtained special equipment coverage for costly musical instruments, which allowed him to recover his damages after the fire. When you see things that you value, go to your insurance agent and get coverage for them!