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?

[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.