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Do not lose the credibility of your insurance company after a loss occurs – Blog about real estate insurance coverage



Insurance companies are hardly easy to work with, but a sure way to make it harder is to hinder your own credibility and try to take advantage of the technicalities of an insurance policy to enrich yourself. Janney v. CSAA 1 is an excellent example.

In Janney the insured lost his home in a wildfire. The CSAA estimated the fair cash value (ACV) and paid it. Janney then signed a contract with a contractor to replace the home for about $ 250,000. The finishes were of lower quality, but the house was larger. After signing the contract, Janney received another estimate that was about $ 100,000 higher and demanded that the CSAA pay the difference. Finally, the CSAA paid a revised ACV approximately $ 30,000 less than the actual contract price, but still $ 1

30,000 lower than the second estimate obtained after entering into the conversion contract.

When the CSAA refused to pay more, Janney applied. The CSAA was quickly informed that Janney completed the replacement home and paid the contract price of approximately $ 250,000, citing the standard replacement cost value statement which states that the CSAA will pay the replacement cost without deduction of depreciation, but not less than the following: ACV until completion, policy limit or costs to replace the property.

To be creative, Janney claimed that the CSAA was required to pay a higher ACV amount based on the estimate that was $ 100,000 higher than her contract price, even though Janney completed the renovation of the house at the much lower contract price. The court slammed the door immediately because Janney was seeking more than she actually spent. The court cited a long passage from early California law that explains these three options:

In Conway v. Farmers Home Mut. Ins. Co. (1994) 26 Cal.App.4th 1185, 31 Cal.Rptr.2d 883 ( Conway ) the Court interpreted an identical provision. The court first declared and relied on Hess v. North Pacific Ins. Co. (1993) 122 Wash.2d 180 [859 P.2d 586] att & # 39; & # 39; the origin & # 39; & # 39; of such provisions was the recognition that an insured covered by a traditional insurance, which only provides payment of the real value of the property & # 39; & # 39 ;, may not be made whole due to the increased cost of repair or conversion. Thus, compensation cost recovery became available … & # 39; [Citation.] ”( Conway p. 1189, 31 Cal.Rptr.2d 883.) The court also adopted Hess the court's interpretation of the different measures of loss settlement:

The first measure, of course, limits the amount available for compensation to political limits, while the second refers to a theoretical or hypothetical measure of loss: that is, the cost of rebuilding the same structure as a limit on corporate responsibility. This special restriction does not require repair or replacement of an identical building in the same premises, but places this conversion amount as one of the damage measures that apply when calculating liability under the compensation cost coverage. The effect of this limitation comes into play when the insured wants to rebuild either a different structure or in different premises. In these cases, the company's liability must not exceed what it would have cost to replace an identical structure as the one lost in the same premises. Although the liability is limited to remodeling costs at the same location, the insured can then take that amount and build a structure at another location, or use the proceeds to purchase an existing structure as compensation, but pay any additional amounts from his own

Finally, the third limitation of liability strengthens the requirement that the company's liability does not exist until repairs or replacements have been made. The purpose of this limitation is to limit the reimbursement to the amount that the insured spent on repair or replacement as another measure of the insurer's liability. This third valuation method is intended to allow an insured person to recover, in compensation cost income, an amount other than what has actually expired. ”[Citation.] ( Conway supra, 26 Cal.App.4th at p. 1190, 31 Cal.Rptr.2d 883, fn. & Italics omitted; see also Everett v. State Farm General Ins. Co (2008) 162 Cal.App. 4th 649, 658, 75 Cal.Rptr.3d 812.)

The court found no evidence in the record that Janney could not replace with a comparable house, considered that she was limited to the amount actually spent. While she made a declaration that the new house was not "as nice" and had some lower quality finishes, it seemed obvious to the court that the extra square meters compensated for this. In addition, the court found no problem with the CSAA's estimate of the cost of compensation and the actual cash value, noting that even if it was low, the CSAA informed Janney that any additional costs could be evaluated later.

In the end Janney order shows a failed legal theory that could never get off the ground, even before a lawsuit was filed because the insured withheld information and tried to be deceitful. Maybe the insured was led by bad advice elsewhere, but this is undoubtedly a decision the CSAA will hang on to in its trophy case and show up for its insurance friends.
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1 Janney v. CSAA Insurance Exchange (Cal. Ct. App., October 15, 2021, No. C089534) 2021 WL 4810353, at * 13.


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