House Burned Up -- Anyone Know about Insurance?

[EddieWalker]

I'd be very hesitant to change too much around on a house that you are going to sell. You have a set footprint with the existing foundation. Plumbing is in place. Making changes will just add to the cost of building it and take away from your return when you sell it.

Things like opening up an area by not putting a wall that was there before and bigger windows will make a huge difference. Expanding a master bathroom as big as possible will always sell a house faster.

Be careful not to do anything trendy. I've seen some hideous granite choices in homes that had trouble selling. High end home with obnoxious counters don't sell. Keep it neutral and light!!!

Lots of trim is also a big selling point. It's easy to put up, doesn't cost much and really makes a statement with a good paint job. I've seen big, newer homes that look terrible with plain, simple windows that had trouble selling, and smaller homes with beautiful trim work sell very quickly.

Tile and wood floors are always a winner. Carpet works, but you gotta stay neutral. Usually just the bedrooms.

Black is in for lights, brass is out. Brushed nickel for faucets with matching accessories gives a bathroom/kitchen a very clean look for less expense then some of those trendy, high dollar items.

It's all a game when your building a spec home to sell. Talk to several realtor's and see what's selling. Your home that burned might have been very nice, but now that it doesn't exist, you have the oportunity to do it again even better.

Build to sell.

Eddie

 

[rox]

Decks also seem very popular and since he is in California a summer kitchen type of thing would add value. Well hopefully Dave will start a new thread on the actual planning & contruction of the replacement home.

 

[CurlyDave]

I'd be very hesitant to change too much around on a house that you are going to sell. You have a set footprint with the existing foundation. Plumbing is in place. Making changes will just add to the cost of building it and take away from your return when you sell it...

Eddie:

We are very much in agreement here. I am going to follow the existing foundation only changing the location of a few interior walls. I will probably add a small shower to the downstairs lavatory, which the RE agent seemed to think would be a major selling point.

If I get enough money, from the insurance, I can add about 150 sq ft one the side of the house with enough setback, which will increase the size of the LR and the smaller of the BRs.

A big thing going in my favor is that the insurance company is obligated to replace with "similar construction" rather than "common construction" (the old "like kind & quality" has been replaced with "similar construction"). When I built the house, I owned it and was going to own it long into the future. Right now I have a list of things I did which went well beyond code at the time. Some are still well beyond code requirements, in other areas the code has caught up with me.

The list of special items is four pages, many of which will drive the cost estimates much higher than State Farm thinks right now. They also impact salvageability. For instance, the front of the house is ~35 feet long. I framed it with one continuous Glulam 12" x 3 1/4" header 42 feet long, which is cantilevered over one corner and holds up the end of the roof covering a patio. This eliminates a post at the corner of the roof. Only one end of this beam is burned, but I am not going to allow them to get away with cutting it and splicing in a new section. Continuous beams are always stronger than interrupted beams. Not only is the roof above the beam pitched in the normal manner, but the beam itself is pitched by 3/32" per foot along its length, which forces water to only flow one direction in the gutter and allows a no-downspout situation where the low end of the gutter is directly above the creek.

As a practical matter, I doubt I will replicate lot of the special features, as they are all hidden from view, and no buyer will pay an extra nickel for them, but I can make the insurance company pay for replication, so I have some extra money to spend on upgrades on interior finishes.

The trim is another area. The original house was trimmed throughout with stain-grade oak. (I found a lumberyard going out of business and bought their entire stock for about $0.50 per foot). Replacing it would cost about $25k in materials today. Plus the labor for installation. The modern trend is to paint-grade trim which is just some kind of foam plastic. Maybe 1/10 the cost and easier installation. Make all you lengths just a little short and fill the gaps with caulk instead of learning how to make a tight joint without caulk. And don't even think about asking a modern trim carpenter to match the grain at joints. Only one buyer in a hundred would recognize that stain grade trim was classier than paint grade. Women prefer painted for some reason.

Rox:

I will start a new thread on the rebuild. Right now I haven't shown any pictures, because the lot is so heavily wooded that the house is virtually invisible from the street -- all that can be seen is trees & leaves.

 

[Wayne County Hose]

Dave,

I'm thinking you will be able to do what you want to anyway. After our house burned, State Farm told us we could build whatever we want or even sell the empty lot and pocket the money. They didn't care, the policy was paid and that was the end of their responsibility. However, my demolition was not part of the structure settlement. Foundation was also part of the structure. State Farm did pay for an engineer to come from 4 hours away to inspect our foundation to see if it was usable. He had all kinds of instruments in his car but never took them out. He walked around with a 3lb. ball-pein hammer and hit the foundation listening to the thud. He said that fire damage in concrete would sound hollow.

p.s., I offered to put Eddie and his family up in a hotel room and offered to let Steph use my Sako .243 to hunt coyotes if he would do my house but he couldn't do it.

 

[skipro3]

Yes. Fire can ruin a foundation. The insurance adjuster won't have much room to argue with the local codes people.

Having dealt with insurance on a house fire, here's something good to know;
The cost to bring the home up to code is not part of your policy limit. It's covered above and beyond the home's value. For example; if the codes now say dual pane windows are required, or florescent lighting in the kitchen, then those costs are not taken out of your home insurance payment. So, if the house was appraised at $200,000 (house only, not the property) and it costs an extra $5,000 in upgrades to bring the home up to code, then the insurance company pays $5,000 above and beyond the $200,000 home value.

Also, by rebuilding as opposed to just taking the money and buying somewhere else, most policies have coverage for an extra 50% for actual replacement costs. That $200,000 home appraisal could cost you up to $300,000 to actually be rebuilt and your insurance company will cover up to that limit. Your property taxes should be adjusted while the home is under construction and not final inspected. Your permit fees should be almost nothing too. Permit fees cover things like schools, fire departments, roads, etc. Those fees were paid with the original house. This replacement house does not add to that burden and therefore should not have to pay additional permit fees other than the inspection of the building during construction. In my area, average permit fees for a new home are about $30,000. My fees were under $5,000.

My policy also included a clause that stated if I maxxed out the limits on my policy; home, contents, landscape, other dwellings (fences, driveway, septic, etc), then they would add an additional %5 to the limits on the policy.

Since I'm on a roll, most policies include a "loss-of-use" clause. That covers anything insured to be rented and/or provided for free. There is no dollar value limit either. For me, that meant that immediately, I was provided a 3 bed suite in a very nice hotel that allowed pets. We were there for 7 weeks while looking for a rental house. The cost of the rental house was covered. The rented furnishings, right down to the pots and pans, iron, TV, stereo, everything you had in your home that was insured but is now destroyed are also covered with no dollar value limits. Most insurance companies are very lenient with this. I did a lot of fishing, rather than rent me fishing gear until I could shop and replace the stuff, they covered a couple charter fishing trips instead. The house keeping was covered too. We had a house keeper come in since we were busy with the rebuilding of the new house. Lawn care at the rental is also covered. Utilities up to the amounts I paid regularly at my old house were covered. Any additional meal costs above my regular grocery bills were covered. (We ate out a lot while rebuilding too)
Everything I described was explained to me by my insurance adjuster assigned to me from my insurance company. This guy was my best friend, advising me on everything during our recovery.

 

[Ductape]

Everything I described was explained to me by my insurance adjuster assigned to me from my insurance company. This guy was my best friend, advising me on everything during our recovery.

This doesn't sound like any insurance adjuster i've ever met. In fact, (according to ones i know) they are generally paid some sort of percentage on the money they "save" their insurance company.

 

[Wayne County Hose]

Everything I described was explained to me by my insurance adjuster assigned to me from my insurance company. This guy was my best friend, advising me on everything during our recovery.

Our adjuster was very good to us also, like I stated before, maybe better than she should have been but maybe just doing her job. Would be nice if Dave's adjuster went to the same school ours did.

The rented furnishings, right down to the pots and pans, iron, TV, stereo, everything you had in your home that was insured but is now destroyed are also covered with no dollar value limits

This was covered as part of our contents.

Also, by rebuilding as opposed to just taking the money and buying somewhere else, most policies have coverage for an extra 50% for actual replacement costs. That $200,000 home appraisal could cost you up to $300,000 to actually be rebuilt and your insurance company will cover up to that limit. Your property taxes should be adjusted while the home is under construction and not final inspected. Your permit fees should be almost nothing too. Permit fees cover things like schools, fire departments, roads, etc. Those fees were paid with the original house. This replacement house does not add to that burden and therefore should not have to pay additional permit fees other than the inspection of the building during construction. In my area, average permit fees for a new home are about $30,000. My fees were under $5,000.

My policy calls for 20% additional. We had to lay the money out first then get reimbursed. Our township waived the permit fees, but the inspections still cost us almost a thousand.

 

[Doc_Bob]

"Where in my policy does it say that State Farm can require that I re-build in less than the most cost-effective manner?"

Well, after a few minutes of conversation he came to believe that he didn't want me to bring that question to the insurance commissioner. Today they caved in and I got a fax saying they would pay the excess cost and it wouldn't come out of my policy limits.

Thanks for telling us your story. I am learning so much. If it ever happens to me, I will be a bit smarter for your troubles.
Bob

 

[skipro3]

My insurance company is SAFECO and I highly recommend them. You can't just go out and get hold of SAFECO either. They only work through an insurance broker. I recommend getting out the yellow pages and start calling insurance brokers in your area and see who represents SAFECO.

Policy coverage is what you pay for. I bought a plan that covers 50% over actual appraised value to cover replacement. 20% is a popular option, but I used every bit of my 50%. It costs a ton to demolition the old place and in California, everything is hazmat and recycled. That cost extra; to have a licensed hazmat company haul away the stuff and to pay a recycler to accept the stuff. Even concrete is recycled.

I want to add that, even though the loss-of-use clause has no dollar limit, there is a 2 year time limit. Everything is free for a two year period but is cut short as soon as the insurance company pays out. So after I received the last draw from them, the coverage technically ended. However, my adjuster said they would continue to make the payments on the rental stuff until the house was finalled and I was able to move in. That wasn't a problem because I withheld the final $50,000 draw on the house to my contractor UNTIL the house passed final.

Here's something else I did; I opened a bank account that had interest. I had well over $500,000 from the insurance company making 4% while building the house. In order to have the account protected under the FDIC $100,000 limit, I created a trust fund, then put me, my wife, my dad and my two sons as the beneficiaries. With a bank account in a trust name, it is insured for $100,000 for EACH trustee. 5 people in the trust, so $500,000 Federally insured. In today's banking market, protecting your insurance payments is important.

Oh, and my tractor; it's covered under my homeowner policy as long as I don't take it off my land. If I were to transport it around, like, to help a friend out or something, then the policy coverage is $128 a year.

 

[2manyrocks]

About that trim---there are some foam products out there, but most paint grade trim is either finger jointed pine or MDF which is basically a type of hardboard. The MDF has a more uniform appearance than finger jointed material. It tends to be more uniform in dimension than the pine stock. It's disadvantage is that it is more dense and it's much hard to set nails so they don't show.

Installation wise, in my opinion, it is unacceptable to simply miter each side of every corner at 45 degrees and then caulk. First, a true 90 degree corner is rare. Second, these caulked joints open up and show gaps with changes in heating seasons. Each corner needs to be measured individually and coped with a coping saw for the joints to stay closed. "Caulk and paint make a carpenter what he ain't."

The other thing that will happen is that the insurance company is going to want to have you replace trim in only the area being reconstructed, and then the trim will be mismatched with the area that didn't burn. Then the question gets to be--"why doesn't the trim match?" Answer: we had a fire. Then the buyer gets nervous or starts asking for a price cut.

Might help you in selling the house if you keep a photo log to show buyers that no shortcuts were taken in the rebuilding.

What is the record for the longest thread on TBN? I suspects it's going to be broken.