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To Rebuild or Repair After a House Fire: Who Decides?

Updated: Nov 6, 2022

When choosing whether to repair or demolish your fire-damaged home, you should consider a long list of factors.

Your insurer may push hard for the lowest-cost option, but this arbitrary standard may not be what you seek or what your homeowner's policy promises.

Who triumphs in a battle between policy and law?

Insurance experts say you can determine how a homeowners insurance policy should react to a loss by reading the policy language.

They also say that it often takes a lot of knowledge and deep understanding to figure out how the language should be applied in real situations.

Preparing for the debate begins with carefully studying the policy language and applicable state statutes.

Twenty states, including New York, have valued policy laws that protect policyholders from jumping through hoops to prove the actual cash value (ACV) of their damages should their home be declared a total loss.

Valued policy law (VPL) is a legal statute that requires insurance companies to pay the full value of a policy to the insured in the event of a total loss. Valued policy law does not consider the actual cash value of the insured property at the time of the loss; instead, the law mandates total payment.

Each state applies its valued policy law differently.

Some states limit their valued policy laws to residential fire losses, while others include all perils covered by the homeowner's insurance policy.

The tipping point is when the home's repair cost exceeds 51 percent of its insured value. Once the law applies, the homeowner no longer needs to prove the home’s ACV, and the policy limit is awarded for the dwelling.

The caveat is that when the dollar amount is close to 51%, the insurance companies will continue to lowball to keep below that threshold, which is why it’s important to utilize a Public Adjuster far before this process starts.

In states where a damaged property is repaired by an insurer, the homeowner’s policy must relinquish that right if the damages exceed the threshold.

Unfortunately, implementing this valuable policy law can be a difficult uphill battle.

Some municipalities do not uphold the law, while others will but make it difficult for policyholders to benefit from it.

This description can be summarised as ‘very clear and straightforward,’ but applying it may be difficult.

It can be especially frustrating for policyholders whose damages exceed the tipping point in one estimate but fall short of it in another.

New York State is ‘carrier friendly’, often sides with insurance companies over policyholders, and allows court battles that can last for years.

The scope of the loss is extensive. Getting a thorough scope of loss assessed by a fire damage professional is one of the most important steps in your home fire insurance claim.

You need someone experienced in fire damage to thoroughly assess your loss and identify every detail — so you can restore your home to its pre-loss condition.

There’s nothing more upsetting than finding out that a policyholder has been shortchanged on their claim.

Marcey L. of Westhampton Beach, NY, insurer and network (insurance company) contractor had convinced her that her 50-year-old fire-damaged home could be restored for less than half of what it would cost to replace it, despite one end of the house has fallen into the basement.

This would have been avoided if a public adjuster had been retained from the onset of the claim.

These instances drive public adjusters to inform policyholders that we are here to help them.

For all the years that she and her family resided in their home, Marcey was a faithful insurance client, paying premiums for almost 18 years without ever filing a claim.

When she needed her policy to be loyal in return, she was blocked, which put her health, welfare, and investment at risk.


Even though a policyholder’s policy is valued, carriers and/or shill contractors may collude to increase their incomes while pretending to care for their clients.

If you think you’ve been underserved in terms of the extent of your injury or the size of the plan to cover it, today is the perfect time to locate a public adjuster.

There’s a lot to be done. Even if a fire is contained to one room or level of a home, toxic smoke and soot damage can spread throughout the whole space.

The answer always is whether anything must be replaced or salvaged and restored. In one recent fire loss in Lindenhurst, NY, flames traveled from the kitchen up the wall, through the ceiling, and into the rafters, destroying the trusses closest to the garage roof. Since both the carrier and their network contractor agreed that some 2X4s near the burnt trusses and a new roof would be sufficient, the garage’s owners were outraged when the policy didn’t cover necessary repairs with materials of like kind and quality that would return the house to pre-loss condition.

It is evident that the scope, repairs needed, and value of a house fire loss can all be interpreted differently, depending on which party benefits from the interpretation. To ensure that carriers and their representatives (their employees, independent claims adjusters, network contractors, property inventory vendors, and even contracted labs) benefit from lowering insurance claim expenses, they reduce the cost of homeowners' claims.

Who decides? When a house fire occurs, policyholders may be overwhelmed by the issues that need to be resolved with their homeowner's insurance claims and the repairs necessary to restore their biggest investment.

Those decisions will be made by the individual who shows the greatest determination, provides the most compelling evidence, and advances the strongest argument based on the policy, the loss conditions, the law, and other applicable insurance requirements.

Even in cases where the damage is extensive and obvious, the settlement might still be sufficient to cover reconstruction costs if a careful eye and proper tactics are utilized. Furthermore, in some situations, the damage is less obvious, but a knowledgeable eye and proper procedure can still result in sufficient payments.

The policyholder is frequently shortchanged, regardless of the scenario, because they don’t realize they should fight or are outmatched in the battle.

To guarantee the right result, you should know what your insurance policy promises and how those promises impact your plans to repair or rebuild your fire-damaged home. Your insurer's direction is unknown, but handling your claim is straightforward.

Our public adjusters are property claims experts who assist policyholders like you. We’ll assess and advise you about your losses and coverage at no cost, as we want you to recover fully whether or not you need to employ a public adjuster.

If you’ve had a house fire in Long Island, NY and need a free consultation call Kevin Godfrey of Long Island Public Adjusters, LLC at 516–410–0164 Originally published:

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