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guybeck
3 Posts |
 Posted - 11/14/2003 : 16:38:16
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Some of the issues referred to in the past posts are not really about like,kind,quality. The issue is what constitutes damage. Several people keep going back to roofing for examples. It is simple that if there is any life left in the roof and hail strikes it then qualitatively (damages the reinforcing mats) and can be quantified (12 plus hits per square) you are going to have to replace it. However, I live in the state of Minnesota that several of the posts cite matching issues) and still will argue if the roof should have been replaced five years ago due to natural aging/deterioration there has been no loss. What is the concept of Damage: 1. Aesthetically any difference, 2. Loss of value, 3. Reduction in life/use of product. Where is the damage?
I have watched a certain roofing product that most of us would call defective defended in court by that manufacturer as saying the the cracks in the shingles cannot be seen from the ground and the judge agreed. Manufacturer walked away without paying a penny. They even have the gall to tell homeowners that the cracks are "normal" to those shingles. My point is to show you the extreme that these cases can be defended.
Currrently, we are going through a phase (due to the matching issues against Am Fam in Minnesota) in which contractors are asking us to spend 40 minutes looking at siding at all angles with a 1,000,0000 candlelight power flashlight at trying to find very lightly dented aluminum siding. They know we rarely will find a matching siding and are looking for that 30SQ job. I have some companies taking hard stands and other companies not willing to defend themselves.
Another issue is repairability. I am not allowed to slope roofs here unless a matching issue already exists. I have read one post that says you cannot repair cedar. Cedar roofs develop erosion spots/weathering cracks and have to be maintained over the years. That means replacing out the weather split/erosion spots with new cedar constantly. Asphalt shingle repairs are easily done. My frustration is why every homeowner is not left with even a bundle of shingles from the last time it was re-roofed.
The last issue on this post was over a brand name of a home. In electronics/tools/furniture, etc I try to stay in the same brand name in getting LKQ pricing to avoid the unnecessary arguing. However; we are normally looking at items in the 100's of dollars range. But I am with the concept that a house is a house is a house. I think of brand names about the same way as I look at a warranty. Barely worth the paper they are written on. You either have a quality built home or a poorly built home. Going with a name does not insure quality. For an example of that, I have about 2 dozen stucco claims in which the average estimate is $120,000 due to water intrusion on $550,000 homes.
Commonly, I have replaced carpet in people's home for a lot less than they originally paid for the EXACT carpet. Some wealthy people sometimes get hosed by contractors. I had one guy charged $59/SY originally and I was able to get the same contractor to install the same carpet for $28/SY. I also had very high end carpet at $125/SY and I was able to get it for $82/SY. |
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Wes
USA
62 Posts |
Posted - 11/14/2003 : 18:02:40
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| Ok I have a scenario food for thought. Lets say a rather extravagant nervous shopper on a daily trip to Rodeo Drive walks in to the most expensive and elegant designer 7-11 convenience store this country has ever seen. This shopper purchases a $50.00 piece of Double Bubble bubble gum that the rest of us would pay $00.05 for at any normal 7-11. Now back at the house this piece of bubble gum left on the dresser with the Rolex and diamond tennis bracelet gets stolen by a cat burglar. A police report is filed and a insurance theft claim is made. What is this unfortunate rich person owed by his insurance carrier for the theft of his bubble gum? $50.00 as that was the value he paid----A piece of gum of like kind and quality bought at any 7-11 for $00.05-----Replaced with A piece of gum purchased from the same designer 7-11 the original came from???? What if a receipt is provided from the original purchase documenting the value of the gum, does this change things in any way? I love insurance claims and I love this forum because we can post anything and get a 100 different views on how a claim should be handled. I have mentioned in some of my earliest posts that this forum has taught me more than any classes or seminars that I have attended and to think it is all free. I would gladly pay to be a member if needed but I am not sure I would change anything about the openness of the forum. Good job Roy, let it ride!!! |
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katadj
USA
315 Posts |
Posted - 11/14/2003 : 21:07:30
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| Imdemnification is the rule. |
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KileAnderson
USA
875 Posts |
Posted - 11/15/2003 : 00:06:37
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| He is owed a piece of gum. Not $50 and not $0.05, but a piece of gum. Pretty simple. |
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Type R 1090
Canada
14 Posts |
Posted - 11/16/2003 : 04:19:24
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If we are looking at this on a replacement cost basis, the wording I deal with daily defines it as the cost of repairing the property with materials of similar kind and quality (which wouldn't apply in the gum example) or the cost of new articles of similar kind, quality and usefulness on the date of the loss.
The key here is that they are entitled to a LKQ replacement. Chewing gum for chewing gum (preferably same manufacturer and flavor). There is no mention of original cost paid etc.
One issue that raises its head at times with insureds is what constitutes a LKQ replacement. There are some people who think that their then top of the line 15 year old TV (which they may have paid $3000 for) should be replaced with a top of the line TV today. I would point out to them that a TV with similar features today may be considered a entry-mid level model costing about $800, and even at that they would still likely gain some features they never had. Some will still think it's "unfair" because the replacement cost is less that what they paid. The easiest way I found to difuse that is to find items on their Schedule of Loss that cost more to replace than original cost and point out to them that if I used their reasoning to pay on those items, if they thought it would be fair. |
Edited by - Tom Toll on 11/16/2003 08:08:09 |
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catmanager
USA
102 Posts |
Posted - 11/16/2003 : 08:42:28
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| Excellent |
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bobdog127
3 Posts |
Posted - 11/16/2003 : 15:29:24
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Wes and Kile,
What if that same Rodeo Drive store had its own brand of bubble gum, "Rodeo Bubble," that cost $50 a piece. If that piece of gum needed to be replaced a $0.05 piece Double Bubble isn't going to do it. I contend that there's perceived value in brands.
Here's another example.
Gibson is a major guitar maker in the US. One of it's signature guitars is the Les Paul, a standard in rock and roll. Gibson used to manufacture in Michigan. A while back it moved its operations to Nashville. Gibson left behind a factory, some manufacturing equipment and some key, former employees. These employees re-opened the factory and, using the same equipment, began making Guitars under the "Heritage" brand. They reproduced Les Pauls using the same materials and to the exact specifications as the old Gibsons (bear in mind - these are the same employees too!) One could argue that the Heritage Guitars are like kind and quality as Gibson's (maybe even closer to exact kind and quality).
Today a Gibson Les Paul retails for about $1500 US. A Heritage Les Paul retails for about $1100. Let's remove the uncertainty of marketing departments (Heritage may be undercutting Gibson to gain market share); On e-bay, a pretty good example of an efficient market, a Gibson Les Paul will always fetch more cash than a Heritage Les Paul even though they are of like kind and quality. Why? Because the market recognizes the value of the Gibson brand. If my Gibson Les Paul were stolen, has the insurance company fulfilled its obligation by replacing it with a LKQ Heritage?
Back to houses.....Some of the value in my house is due to the Acorn brand. If a builder duplicates the house using materials of like kind and quality it still is not an Acorn house. And CCarr, I don't agree that the design is what makes an Acorn an Acorn. |
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KileAnderson
USA
875 Posts |
Posted - 11/16/2003 : 16:19:11
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Bob,
In the scenario given the piece of gum in question was Double-Bubble. I happen to have a gallon tub of it sitting in my hotel room that I purchased at Sam's Club for around $5. If I take that piece of Double-Bubble and hand it to the insured who's piece of Double-Bubble was stolen all is well and they have been put back to their pre-loss state.
If they had a special piece and only one company made and sold it then I would agree that the carrier would probably owe an exact replacement. The same difference could be said if it was Godiva chocolates that had been stolen, a Whitman Sampler would not be a suffiecient replacement.
A house on the other hand to a "reasonable" person is a house. I have never in my life heard of a name brand house. Maybe it's because I live in an area of the country where they don't exist or maybe it's because I'm not a real estate agent. But I believe that if contractor A can build the exact same house (with regards to craftsmanship and materials) for 50% less than contractor B, then all the carrier owes is what contractor A will do it for.
A house is not a piece of gum, or chocolate or even a car. A stick built house is not a commodity. it is completely unique and therefore anyone with the same materials and skills can build the exact same house as anyone else with the same materials and skills.
As far as your example of the Les Paul. I spent a significant amount of time in High School drooling over various guitars (even though my ability to coax music out of one was somewhat suspect.) I would say that an exact name brand was owed. The same exact scenario happens in the firearms field all the time. Taurus makes the same guns that Barretta and Smith and Wesson make but they are cheaper, if my Berretta model 92 gets stolen I would expect a Berretta as a replacement (assuming I have the appropriate firearms endorsement.) There is a huge difference between a custom built item like a house and mass produced items like gum, guitars and guns. |
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DougM
1 Posts |
Posted - 11/19/2003 : 21:00:43
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Hi folks,
I am an insured dealing with roof damage from Hurricane Isabel. A Google search brought me to your great forum. I'm not in the insurance biz, but my wife has been a Commercial Prop & Cas Underwriter for 25 years. Here is our problem...
We have a large house in an upscale neighboorhood (architectural restrictions on roofing materials, etc). Average prices in this neighboorhood run from $750K to over $1 Million. We have Replacement Cost on the structure. We have roof that is in great shape, 8 years old, but made of a product (WoodRuff) that has been pulled from the market due to a Class Action suit against the manufacturer (Masonite). This manufactured product is supposed to look like seasoned cedar, but really has a unique appearance unlike anything else on the market. There is no replacement for this product and there is no remaining inventory of it anywhere. A tree fell on the house and ripped off about 12 sq feet of the roof on one of the front-facing elevations. The insurance company says the policy does not allow for matching, but my detailed review of it did not reveal any languace explicitly excluding matching. They feel that (and I quote the adjuster's manager) "a functioning, non-leaking roof that is asthetically pleasing" is all that need to be provided. As long as the quality is comparable to the rest of the roof, it doesn't need to match. They have sent a settlement check in the amount of $2100. Two independent estimates from reputable roofing companies to replace the entire roof with Grand Manor shingles came in at around $32,000. I'm not trying to take advantage of the situation. I would be perfectly happly just replacing the damaged section with new WoodRuff material. It wouldn't match at first but would fade within a year. Unfortunately, that option is simply not available. There is no product on the market that even closely resembles the "WoodRuff" on the rest of the roof. The insurer thinks its OK to just put up some other material on that one section of the roof (Cedar or Grand Manor on that section, WoodRuff everywhere else). That should really help to attract buyers when I go to sell the place :-)
If the insurance company is unable to repair or replace the damaged section with "like kind", don't they have to replace the entire roof?
By the way, my Wife the Underwriter says the have to replace the whole roof.
Discuss....
Thanks in advance,
Doug
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Edited by - DougM on 11/19/2003 21:06:49 |
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Steve_One
USA
22 Posts |
Posted - 11/19/2003 : 21:07:22
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There may also be a provision in the policy regarding obsolete items and materials, have you read that one?
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CCarr
Canada
1200 Posts |
Posted - 11/19/2003 : 23:01:53
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Doug, your situation has parallels to the items I discussed in my 10/08 post @ 19.14, on page 1 of this thread.
I would suggest doing a case law web search relative to your State on this matter, and see if you can uncover the needed "ammunition" required to sway the carrier.
In addition, perhaps ask the author of the letter you mention to specifically relate from the policy language, what is applicable to the quote from the letter you mentioned; and preferably get that in writing, and keep after a clear answer as to the exact policy language that was considered to parallel the quote in the letter.
I'd be inclined to cash the check (IF endorsement on the back does not constitute a release of your claim entitlements) and then file a properly completed Proof of Loss for the amount of damages you feel are proper, less the "partial" payment you accepted; and await the next move by the carrier. In that regard, carefully review the "Section i - Conditions" wording of your policy, particularly the "Appraisal" wording, and consider your further options. |
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Type R 1090
Canada
14 Posts |
Posted - 11/19/2003 : 23:15:24
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| I handled a claim similar to your last year. A branch hits a home that has clay tile roofing. The tile was about 12 years old, therefore no longer available and cannot be patched. There were a total of 3 tiles missing. The roof had four sides and the layout was such that only 2 elevations could be seen at any given time. A settlement was negotiated that was acceptable to all parties involved: we paid for 2 sides of the roof and waived their deductible as an appearance allowance, and the insured paid for the other sides. |
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KileAnderson
USA
875 Posts |
Posted - 11/20/2003 : 08:33:28
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Doug,
I don't know who your carrier is, but, some policies have loss settlement options such as A1 and A2 that stipulate either similar construction or common construction. I believe that this is where the "we don't owe for matching" idea comes from. You say that nowhere in the policy does it state that there is no coverage for matching. But do you see anything in the policy that says the carrier DOES owe for matching?
I know it doesn't make much sense, but in cases like this you have to go by what is in the contract between you and the carrier, the policy. Just some ideas. |
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Like Kind & Quality or Pre-Loss Condition?
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