State Senator Ben Allen walked Radcliffe Avenue with this editor. He saw empty lots and was told that the major problem people were facing was insurance companies not paying out what was owed or that they were underestimating the cost to rebuild so they could pay less.
(Editor’s note: the following letter was sent by a Palisades Resident.)
Many reports point to the slow pace of rebuilding in the Palisades. The explanation is simple. We, Palisades residents, are being stymied by the practices of insurance companies.
Look at how our insurance company is handling payment of dwelling claims. They start with a fantasy lowball estimate of cost for square foot to rebuild—which no one believes can be done—and say that if we want to get the full amount of the policy, we have to start rebuilding. The starting point should not be the fantasy number; it should be the amount on the policy that they agreed to.
In our case, in mid-May we finally received a “Structural Damage Claim Policy” totaling over 60 pages.
We had a builder, who is contracted to rebuild the house next to our now cleared lot, review the document.
After reading it, the builder said that the estimated cost to rebuild of $350 per sq. ft is “extremely low. Our projects usually start at around $800 per sq. ft. (plus or minus).”
The builder cited omissions such as a need for a soils report, which is essential before any foundation work is done. [Our house had very deep foundations–as I saw during debris removal.] The document ignored those costs.
He writes “It looks to me like all the finishes are low… It looks like they are giving you apartment type finishes instead of custom home.”
A preliminary review of the document confirmed this. From ceilings to window treatments to carpets to lighting fixtures, the insurance company, State Farm lowballed everything. The driveway estimates are absurdly low. In the garage, they have replaced expensive heavy duty shelving units with cheap stuff and left out other shelving units altogether.
And they say we will get nothing more until rebuilding.
Our insurer has engaged in this tactic all over the Palisades. The $350 sq.ft. figure seems to be pretty typical. It is in fact a fantasy figure. How is it that this process starts with lowball fantasy figure instead of facts?
On our claim they’ve paid about X % and say that we have to start rebuilding before they will pay the full amount of the contract. Given conditions it will be several years before we can rebuild.
This amounts to impoundment of money owed us, since insurance clearly will owe us the full amount, plus more with the Option ID. By not paying us the full amount now, they are reaping interest on the difference—money which should by all rights be ours.
I’ve been trying to make the point to the insurance commissioner and other officials that a priority should be insurance reform. Process determines outcomes. This process needs to be challenged. Maybe the ongoing insurance commissioner review may finally produce some action.
(Editor’s note: This letter is typical of those who have State Farm Insurance. Six months after the fire, this family has still not received full compensation and is being quoted an unrealistic amount with which to build. The writer asked that his/her identity be kept anonymous for fear that he/she might become a target. All the startup Palisades help organizations, who want to see Pali come back, should band together and insist that elected officials require insurance companies to pay.)
The insurance companies are so heavily lobbied in Sacramento and Washington that our politicians we elect are indebted to them and the insured citizens are low on the totem pole
And what about the folks that have zero intention of rebuilding in a city and county that have demonstrated their complete inability to handle as simple and knowable an issue as a PDS.
We have Travelers and are getting the same nonsense. The quote the adjuster sent me is just silly. As far as I can tell there is not much we can do about it until we are closer to building and getting contractor quotes to begin construction.
Same — about $350/sq ft. “offered” by our carrier to whom we have paid premiums for almost 50 years. Hard to start rebuilding until one knows what their insurance recovery will be. Also those of us who had small 1940s houses will of course not rebuild exactly the same 1800 sq ft house so knowing the full amount of recovery is critical to decision making. Thanks Sue for staying on top of this. Keep up the good work.
We spoke with our 7th State Farm adjuster earlier this week. When asked specifically as to the issue of the foundation permit fee and other coverage monies only payable if and when rebuilding occurs, we asked where does it state that in policy?
Answer, “it doesn’t say that in the policy.” He then followed with it being due to “common sense.”
And, that was only one of many responses inconsistent with anything close to reality!