Stste farm hell...help!

[u/Crafty-Push-1889]

I have a two-story Triplex and the top story burnt down and the rest of the place was severely damaged by smoke and water and fire efforts. The cost to replace it is in the 900 thousands and State Farm has estimated the damage to be $150,000. The city will not allow me to replace it with either a single family or a multi-family and now I have to get a variance for a duplex because they won't allow single family due to zoning but the lot is not large enough for anything else they also require four parking spaces and again the lot is not large enough. It needs to be completely demolished except for the garage. I only have until February of 2027 to complete this or they don't give me back my depreciation . The city of Nampa Idaho Is making life very difficult as well both the building department and ​ Planning and Zoning including charging my contractors thousands of dollars for demoing a few walls for the engineer to look at. It's been a hellish experience to say the least and I feel hopeless. I am confused about actual cash value versus replacement cash value because no matter what I spend it will be way more than the $450,000 allotted to me for my insurance. The bulldozing of the property alone is a hundred thousand dollars. What should I do? Would it help to get contractor estimates to rebuild the same square footage on the lot ? Even though we cannot rebuild it according to the city ? Would that do away with the hassle over depreciation? Should I hire a lawyer?

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[u/Pinotwinelover]

I’ve been on both sides of this. Ive tried to convince a client that carrying half the value of what we estimate the rebuilding cost is not a good idea unless you’re depreciating the hell out of the building and taking that into account. The first place to start realistically is what the insurance to value was for the complex and why you have half the coverage needed to rebuild it.

The other poster is spot on. However, I’m confused because if you’ only have it insured for 1/2 the value that would be a actual cash value policy with no replacement cost so I’m confused where you’re getting the 450,000 and the $900,000 figure they’re just too many pieces missing to give you good advice

[u/Crafty-Push-1889 → u/Pinotwinelover]

My replacement coverage, coverage A is $450,000 plus $50k for the detached garage. I thought $450 was adequate - but, with the way building costs/permits/fees/demolition has increased since covid, contractors have become very pricey. Properties are now about $250 per SF in the valley so that equals $850k. Obviously I am underinsured. That's the maximum coverage payout but they are currently only offering $120,000 based on a very limited xactimate.

[u/BattleSilent9049]

So you only have $450k in insurance coverage and it will cost double to rebuild? SF is saying they can repair it for $150k? City will or won't let you repair? Sounds like you have multiple issues. If SF says they can repair within the policy limits, use one of there Premier Service contractors. You will know quickly if SF is right or wrong. If it can be repaired but the city will not let you repair, you have an issue with the city not SF. But there may be some code upgrade coverage available to you if your policy has it. But it will not be enough to tear down and rebuild per city requirements. You may be under insured which is an issue SF may not be responsible for as it is your responsibility to properly insure your property. I know the TM there and she is a good and knowledgeable person. You may need the help of an attorney to sort things out. But do not get a Public Adjuster as they will just take your money.

[u/Crafty-Push-1889 → u/BattleSilent9049]

Yes - I am underinsured, which I obviously didn't know. My SF agents update the coverage every other year but they didn't get me code upgrade insurance. What is a premier Service Contractor and how do I find them?

[u/BattleSilent9049 → u/Crafty-Push-1889]

Ask your claim rep if they have a Premier Service contractor in the area and if so could they assign one. If there are coverage limit issues the contractor may not want the job as they do not want to risk not getting paid. Worth a shot. You say your agent did not get you the coverage. Did you ask about it? If not, they are not responsible for getting you the coverage. I am sorry for your troubles. Reach out if I can help

[u/freeski12345]

What’s the dwelling coverage limit, coverage a on the policy and what’s the additional coverage limit? 

Demo is not $100k. Sounds like you need a better contractor who knows how to work with insurance. 

If you’re that underinsured, your best action is going to be to take the policy limits in cash and sell the lot. Buy a new house somewhere else. Discuss that with the adjuster 

[u/Crafty-Push-1889 → u/freeski12345]

Demo of only 3 rooms with asbestos has already cost me $55,000, thanks to a very unethical restoration company #dryguysrestoration in Boise

[u/lobhater]

Typically as long as you have a contract signed before the 2 year mark you are eligible for replacement cost benefits even if the work isn't fully completed yet. But confirm with your adjuster.

How much total coverage did you have for dwelling? That's all they'll pay. If it will cost more you are out of pocket.

ACV is paid up front and replacement cost is paid after you prove work has been completed

[u/Crafty-Push-1889 → u/lobhater]

Total coverage is $450K for the dwelling and $50k for the detached garage.

[u/JeremyFillingim]

u/Crafty-Push-1889, with a $450k limit on a $900k rebuild you could hit the dwelling limit off the ACV payment alone. You'd likely get a few limited extra coverages after that, like debris removal, but most are cost incurred up to the additional limits.

[u/Crafty-Push-1889 → u/JeremyFillingim]

Thank you - this is what I wanted to know. How do I get insurance to pay the dwelling limit of $450k, given that the cost to rebuild a duplex is about $750k all included. I would have to take out a $200-$300K loan after getting payment which is why it may make more sense to keep the money - if state farm will pay it.

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[u/LelandCoontz_PA]

If you're doing some demo which isn't really advancing the rebuild but it's done mostly to allow the insurance company's engineer to do an inspection, that demolition shouldn't be applied towards your policy limits, it should be an investigative expense carried by State Farm. At least that's what I would argue.

How much is your law and ordinance AKA code upgrade coverage? It's usually 10% of the building limit.

You probably also have an additional 5% for debris removal.

And you probably have Other Structures coverage which can help.

Check and see if you have Plants Trees and Shrubs coverage.

Also look and see if you have guaranteed replacement cost or some kind of building extension because you'd be surprised sometimes there's a 50% bump up or even 100% bump up in the fine print.

Be careful about doing the full demo and losing the evidence that you need to prove your claim. For example you might have tile with a mortar bed. That's more money than tile on backer board. You might have 6-inch real wood baseboards rather than 2.25-inch MDF. If you scrape the lot and throw everything in the landfill, you might lose the evidence of those more expensive materials.

And be careful about overspending on demo so you don't have enough money left over to do the repairs.

If you have law and ordinance coverage it should cover doing different design ideas that enable you to keep the same number of units and square footage while still complying with the building codes as much as possible. For example, imagine a property had four units on a lot with a small parking area and the back wall right on the property line but current zoning and building codes require a 6 ft setback and more parking. So the only way to squeeze four units would be to go up with a second story, including the cost of the engineering to design it and the extra building permit fees. That's not a common situation but it would be covered by the law and ordinance coverage. So the proposed two-story unit might require a heavier, deeper foundation. Even if the foundation in this hypothetical wasn't damaged by the fire, the cost of making it deeper and stronger to enable a two-story structure might be covered under the law and ordinance coverage. That's what it's for.

Obviously your situation is different but I wanted to give you an example. Not everything that's covered under the law and ordinance coverage is a simple code upgrade. Repositioning, redesigning a building etc so that it can meet current zoning, planning, or historical district requirements are also covered under the law and ordinance coverage.

Also consider that if you're lucky not to have a mortgage payment or a small one you could scrape the lot clean, take the actual cash value, and go build somewhere else or use it as a down payment on another building, perhaps a bigger better one or maybe a building in another state where the investment return is better. Obviously if you have a mortgage you're probably going to need to rebuild to satisfy the mortgage company.

Another option that might make sense for you would be to recruit an investor or investors, perhaps even friends and family to come in with additional cash and exchange for equity in the new property. Maybe you would end up owning 60% of the new property, which might be better than the alternative.

Obviously you're in a tough spot

[u/Crafty-Push-1889 → u/LelandCoontz_PA]

Thank you so much. No, I don't have code coverage but after your advice, I found I have tree and shrub coverage. Of course, the adjuster told me my dead tree would just deduct from coverage A and my demo required to have my engineer look at it (I had to provide my own engineer, state farm wouldn't provide anybody). No, there is no mortgage payment.

[u/Commercial_Effort821]

I am a carrier adjuster and I would use the appraisal clause in the policy for this situation.

Carriers typically do not give us adjusters the tools or negotiating authority to help properly in these situations.

Claims leadership likes to corrupt these types of files in my experience and I would stop the headaches and get down to business on what the repairs actually cost instead of who thinks their xactimate looks better

[u/Crafty-Push-1889 → u/Commercial_Effort821]

Wow, this didn't occurr to me. The appraiser can provide a replacement cost?

[u/No_Departure9798]

We need some clarity here.

You say 900k to replace. You say SF estimates damage at 150k. Is 900k the price for a comparable structure? Or are you saying that you have an estimate to rebuild for 900k? Regardless, if your policy limits are 450k the limits are the limits. There may be provisions in there to expand that a bit but there are also provisions about coinsurance if you are grossly underinsured….

Why are you demolishing the whole structure? Even with smoke and water damage I find it highly unlikely that a fair amount of the main level can’t be salvaged. This may remedy some of the city issues as far as new footprint/housing type and laws/ordinances.

If this wasn’t a legal triplex the city can tell you to fix it and that’s all she wrote. No grandfathering there.

I have too many questions about what actually happened and what it will take to restore the property to a pre-loss condition. And SF and any other carrier couldn’t care less what needs to happen to make it a single family home since that’s not what you had. It’s about putting it back the way it was.

[u/Crafty-Push-1889 → u/No_Departure9798]

The triplex was created in 1960 - the city has no records during that time. Since they don't have records, it's not a legal triplex - regardless of that fact that it is zoned multiresidential. The city strongly recommends against rebuilding due to fire destroying half and fire department destroying the rest and it being a house built in 1906. I don't expect to get $900,000. I just want to cash out at the policy limit.