Latest / Justice Team Podcast / Fires, Claims, and Coverage: The Insurance Avenger Sarah McClain

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Fires, Claims, and Coverage: The Insurance Avenger Sarah McClain · Justice Team Podcast

0:00
Bob: Wait, what?
0:02
Welcome to this episode of the justice team podcast on the justice team
0:06
network, where we give practical how to's for lawyers and, you know,
0:09
everyday folk to be able to make them understand the law and how it works.
0:13
And today we are very honored to have on the insurance Avenger.
0:17
That's actually her Instagram handle, the insurance Avenger, Sarah McLean.
0:21
Sara: Good morning.
0:23
Bob: So Sarah is one person that I lean on for Advice on insurance
0:29
policies and things like this because it's a very specialized area of law
0:33
Sara: Yes, or boring as some people like to describe it
0:36
Bob: All right, give some folks uh, just your background and how you
0:39
got to love for you know, reading these policies and analyzing them
0:43
Sara: Well, I don't think it'll come as any surprise that I didn't grow
0:46
up wanting to be an insurance lawyer um, it was something that I fell into
0:50
after law school, um a Graduated in 2009, best time to be looking for a
0:56
job as a new lawyer, and a firm that was hiring, uh, was hiring for a
1:01
particular case that was going to trial.
1:04
Uh, it was a rescission case, um, involving insurance application
1:08
with misrepresentations.
1:09
And I was hired exclusively for that case.
1:13
And, um, I got an 1800 page claim file and put it in cron order and
1:19
started to, to look into this case.
1:21
And it was a, a woman who had her, it was her third house fire.
1:27
Um, and it was, it happened within a short period after the policy was applied for.
1:32
And, um, so it became a lot more fascinating than about, you know,
1:37
misrepresentations and reliance and all that other stuff that I really
1:41
barely passed in law school anyways.
1:43
Um, and I just really enjoyed it.
1:46
And it was something I was really good at and it's, it made sense to me.
1:49
And so, um, I just went with it
1:52
Bob: because, you know, I've done enough of those third party, we call them
1:54
third party bad faith cases to realize that insurance companies will find any
1:57
way to try to rescind a policy, deny coverage, all these types of exclusions.
2:02
And if you don't know how to fight back, it's, that kind of sucks.
2:06
So can you give our, our listeners and viewers an understanding of
2:09
the difference between like what we consider a first party claim against
2:12
insurance and a third party claim?
2:14
Sara: Yeah, of course.
2:14
So a first party claim is a claim that you make under your own insurance policy.
2:19
Um, and that can be whether it's homeowners policy with property
2:23
damage, um, under your, obviously your auto policy, if you've got
2:28
comprehensive things like that.
2:30
Um, and then a third party, uh, claim is if you were making a claim against
2:34
someone else's policy and most typically we see that with the liability coverage.
2:39
Bob: Yeah.
2:40
And I know you're doing a lot of work for the fire victims
2:42
here in Southern California.
2:44
So I'm going to use that as a use case here.
2:46
So you know, Altadena, Pasadena, Sierra Madre areas, the third party, the
2:50
person responsible is Edison, right?
2:54
I want to concentrate on the first party stuff because, you
2:56
know, We're doing the best we can.
2:59
They're not like super experienced first party coverage
3:02
lawyers to give general advice.
3:03
But again, we'd like to lean on you.
3:05
So can you kind of walk us through your process whenever people come to you?
3:10
Cause we have different buckets of folks.
3:11
First this talk about people that do have insurance on their
3:16
properties that burn down.
3:19
What are the steps that you take?
3:20
Sara: Okay.
3:21
So we're primarily, we're dealing with homeowners.
3:24
I mean, you know, a lot of discussion has been on the homeowners.
3:26
Um, There's also business owners, obviously, um, business owners who lost
3:31
their, their property, their business.
3:33
Um, but when it comes to, to homeowners, number one is I find out who's the
3:38
insurance company because then I know what I'm dealing with and sort
3:42
of what the, what the playing field looks like, um, and what to expect
3:46
and, and how to prepare for that.
3:48
And then I want to look obviously at their policy, mainly their declarations.
3:52
Um, so that I understand what their coverages are and what their limits are.
3:57
Um, and obviously, uh, I know a lot of people have been talking about
4:02
under insurance, um, and that is unfortunately, uh, a real issue.
4:06
Bob: Nobody has more insurance for the value of their home.
4:09
We're seeing anyway.
4:10
Right?
4:11
Sara: Right.
4:11
Bob: Nobody's overinsured.
4:13
Yeah.
4:13
So you have, so on the declaration page, homeowners, what should they want to know?
4:18
What coverages do I have?
4:19
What can I recoup?
4:20
What are the things that you're seeing on these policies?
4:22
Sara: Um, well, I'm seeing people realize that I obviously we've
4:25
got like the dwelling coverage.
4:27
Your standards homeowners policy is going to have dwelling coverage, which is going
4:31
to cover the house other structures, which is going to cover basically
4:34
anything that's affixed to the land.
4:37
That is not your house.
4:38
So your garage or pool.
4:40
Uh, fences, sheds, things like that.
4:42
Bob: Your garden, all these things.
4:45
That's other
4:46
structures.
4:47
Sara: Not with the garden quite, so there's see, there's a separate
4:50
coverage for that for trees, um, shrubs and landscaping.
4:55
So, it all really depends on what the policy, um, you know, what
4:59
the what the policy language is.
5:01
Um, and so, but you want to look for those coverages on the declarations page.
5:06
It won't have any detail about the coverage, but at least you know that okay.
5:10
I've got dwelling for this much I've got other structures for this much
5:14
personal property and then either they some policies call it loss of use others
5:19
call it Additional living expenses.
5:20
Bob: So yes, so whenever the because people ask like what are my Can I go rent?
5:25
What coverages do I have?
5:26
So they're looking for loss of use.
5:28
So what are the, what are the terms there?
5:29
Cause there's different policies.
5:30
Just so everybody's listening insurance, label things different ways per company.
5:34
So what should we, we'd be looking at to see if there's rental.
5:38
Sara: Okay, so rental coverage actually can be one of the trickier
5:41
coverages, um, because you don't own the building structure, but you still
5:48
have an insurable interest in certain components of the building because
5:53
Bob: that's the text.
5:54
I mean, if on your insurance policy, if people say you own your home
5:58
and there's a provision on it to.
6:01
I got to go rent somewhere now because my house burned down.
6:04
Okay.
6:05
What's that coverage called?
6:06
Sara: Okay, so that's additional living expenses or loss of use.
6:09
Um, under fair plan policies, it's called fair rental value because that
6:13
coverage is a little bit different.
6:14
Um, but the standard homeowner's policy is going to have, um, loss of use and
6:19
the overall coverage, uh, insuring provision allows for, um, reimbursement
6:25
for any expenses that are incurred.
6:28
Um, incurred is an important word.
6:29
Okay.
6:30
Um, any expenses that are incurred in order for a insured to, uh, maintain
6:35
their normal standard of living.
6:38
Bob: Yeah.
6:38
So what's, when they see that number, it's usually a gross number, like 200, 000.
6:43
Sara: Yeah.
6:43
It's usually a lot of the coverages other than dwelling are a percentage
6:47
of your dwelling coverage.
6:49
Um, so a lot of people don't know that they need to look at that
6:53
number and, and adjust it and see, you know, what would it take, you
6:56
know, how much would I spend in rent?
6:58
Um, if I've got unique animals that I can't keep with me in a rental, um,
7:03
the boarding cost for that and things like that, it's, it's something that a
7:06
lot of people don't really think about.
7:09
Um, but that limit that's on your policy, if you've got a dollar limit,
7:13
um, that is unfortunately going to be the cap of what the insurance
7:17
companies are required to pay.
7:18
Bob: It is that, I mean, could you rent one place for one month for 200, 000 if
7:23
that's the cap or, I mean, What's the play
7:25
Sara: so that so there's a difference between what the policy covers and allows
7:30
for versus what is going to work for an individual insured in the long run.
7:35
Um, you know, there are people who, uh, their homes were 5, square feet.
7:41
Um, but they only have say 000 in, uh, loss of use coverage.
7:47
And if you're looking at an 18 months to 24 month rebuild period, um,
7:52
you're going to run out of that money.
7:53
If you Find if you insist on having a rental that is the same as your
7:59
as your prior home Um, and so people are just being practical about that
8:04
and also being realistic about the housing market and and really what's
8:09
available so You got to kind of
8:11
Bob: take that number and see if you can stretch it out 18 months,
8:15
24 months for the rebuild process.
8:17
Sara: It's like going back to college and having to do that budgeting.
8:20
That is so difficult.
8:22
Bob: Most everyone's going to be underinsured with the housing
8:25
market here in Southern California.
8:26
So.
8:28
How do they make up the difference?
8:30
Sara: Um, well, it just depends on where, you know, what their circumstances are,
8:35
what resources they have, um, especially with a lot of generational families.
8:39
Um, a lot of them have been staying with, with each other.
8:43
Um, but there are a lot of other resources out there for assistance.
8:48
Um, and I, I have to say, you know, I was born and raised in LA.
8:52
I know I'm a, I'm the San San Diego Padres fan now.
8:55
Uh, yeah, we see
8:56
Bob: the shirt.
8:56
Yeah.
8:57
Very we'll.
8:57
Let, we'll let the comments talk about that.
8:58
I, yeah.
8:59
. Sara: That's all right.
9:01
Um, fryer faithful here.
9:02
Uh, but.
9:03
You know, I am, I am overwhelmed by the outpouring of support and commitment
9:09
by so many community members and so many organizations and it really is,
9:14
um, very encouraging for, for, you know, the community in the long run.
9:18
But there is FEMA assistance, there is, um, you know, the SBA,
9:23
the Small Business Administration.
9:23
Will FEMA help
9:25
Bob: if you're underinsured?
9:26
Sara: So, yes.
9:28
But the question that I still am wondering is when will that help come because they
9:33
want you to exhaust All your your funding.
9:37
So
9:37
Bob: let's use the situation.
9:38
We have a lot of generational families in Altadena that they lose their home
9:43
They they will then stay with a family member but say that they have this
9:47
rental coverage on their policy Can they have their family member charge
9:54
them rent so that the insurance pays?
9:56
Like what, like what do we do in this situation?
9:58
Sara: So it's interesting that you bring that up.
10:00
And my number one piece of advice is just be very careful about how you're handling
10:08
that part of the claim and how you are transacting things and documenting it.
10:13
Um, just because it's, it's kind of a, excuse me, Um, it's a little
10:18
bit of a confusing coverage.
10:19
It really is one of those, it depends kind of things, um, because
10:24
it's whatever you need to maintain your normal standard of living.
10:27
And you and I, you know, one person to the next has a different standard of living.
10:31
Um, and even though you're staying with a family member and you would
10:37
otherwise have to pay rent if they weren't letting you stay for free.
10:41
Unless you are actually handing that money over and incurring an obligation.
10:47
And that's why I mentioned before about that being really important.
10:50
So get a
10:50
Bob: rental contract and really go through the process.
10:52
I mean, I'm of the sense if you had insurance and you're paying for it,
10:55
exhaust every single penny that you can.
10:57
Oh, that's the way I feel about it.
10:59
Sara: Policy limits.
11:00
Bob: Policy limits.
11:01
So a homeowner comes and Say their house burnt down and they're under, they're
11:06
obviously don't have enough coverage.
11:07
What steps do they do next?
11:09
Sara: So, well, first is to make the claim with the insurance
11:11
company, um, and get them to pay out everything, um, that they owe.
11:16
Bob: And you just write a letter and say, pay my policy limits, total
11:19
burn, here's the photos, pay it.
11:21
Sara: If anyone is able to do that, that, that easily, I'd love to know.
11:26
Bob: Well, they give you 30 percent upfront, right?
11:29
They say, here's 30 percent of the policy upfront,
11:31
Sara: right?
11:31
Bob: So send an adjuster over to.
11:33
Take a photo to make sure everything's damaged, right?
11:35
Sara: So at the core of every insurance claim is the insurance company's duty
11:40
to investigate and that Scope of of duty it applies no matter what the
11:46
circumstances are And so what they have to do to investigate obviously depends
11:51
on the circumstances of the claim But in this instance, when it is obvious that
11:57
the homeowner is underinsured, and it is a total loss, and it is going to be 18
12:03
months to, to rebuild, you, you know, they have to have some kind of paper support,
12:08
they call it supports in the file, right?
12:10
So that they're not just like throwing money out at, you
12:13
know, whoever they feel like it.
12:14
but they need to relax the standard and the rigidness of
12:19
their, their standards for what is sufficient to justify that payment.
12:23
Bob: Yeah.
12:24
And there's, there's the other part of the coverage.
12:25
So we have dwelling, we have rental use other structures, and then we
12:30
have other personal property, right?
12:33
That's a big one.
12:33
OPP OPP, you know, me naughty by nature stretch.
12:38
Um, so OPP, your personal property.
12:41
coverage for that, but that's, that's the one that's the gray area, right?
12:44
Cause sometimes they're like, well, did you really have like some out of.
12:48
In your home,
12:49
Sara: right?
12:49
Yeah.
12:49
So if you have a water damage claim, obviously demonstrating your personal
12:53
property losses are is relatively easy because everything's still intact.
12:57
Fire is very difficult.
12:59
Um, every single homeowners policy has a requirement that
13:03
you submit an itemized inventory.
13:06
With the most, some of the most ridiculous details that nobody can
13:09
remember, like, you know, how much you paid for that sofa that you bought
13:12
in 1996 or, or something like that.
13:15
Um, it's, but it is a standard policy, and it is required in order
13:20
to, you know, substantiate the amount of losses, but insurance companies
13:24
are supposed to be reasonable.
13:26
Right.
13:26
Because when they are not reasonable, then they get sued for bad faith.
13:30
But
13:31
Bob: this, I think this is the, this is the more gray where I think insurance
13:34
companies could trip up because if they really, it's like, I mean, come
13:38
on, people's houses burned down.
13:39
You have X amount of coverage.
13:40
Like obviously you could take a look at people's social media and be
13:43
like, yeah, they're, they're home.
13:45
The contents of their home and personal property is very likely over that.
13:48
So let's not mess around,
13:49
Sara: right?
13:50
And that's really what they should be doing, especially in
13:52
the total loss circumstances.
13:54
Um, unfortunately right now they're not, um, that being said, uh, there
13:59
was a bill recently introduced to the state legislatures, um, that
14:02
would mandate the insurance companies to, uh, waive the requirement that
14:07
you submit the itemized inventory.
14:10
Uh, in instances of total loss and shout out to my former high
14:15
school, uh, classmate and ASB president, Ben Allen, who is now
14:19
a state, uh, a state legislature.
14:21
And he, uh, he proposed that bill.
14:24
So
14:24
Bob: Ben Allen's been a huge ally for consumers and victims.
14:27
Um, I mean, he's been, I've never met him, but I could see the
14:30
bills that he writes and support.
14:31
So Ben Allen, if you ever want to come on the show, you're a huge advocate
14:34
for everything that we believe in.
14:35
So we'd love to talk to you
14:36
Sara: and we'll have a San Juan high reunion.
14:38
Bob: There we go.
14:39
So, um, We went through you file a claim.
14:42
This is some of the things we do.
14:43
Let's talk about another bucket of folks renters Uh, I get a lot of
14:48
questions about renters, uh business renters and homeowner renters.
14:52
What are their rights,
14:53
Sara: right?
14:54
and so I'm, one of those people that I I know What what toys I have to
14:59
play with in my sandbox and so in that instance, I you know I talked to
15:03
landlord tenant attorneys who are more Familiar with the nuances of landlord
15:09
rights and things like that Um, if a renter, the issue that I'm seeing with
15:13
renters is, is that they get the stuff handled for what they have coverage for.
15:17
So their personal property.
15:19
Their additional living expenses,
15:21
Bob: but under which policy?
15:22
Sara: So there there's a, so there's a renter's insurance has got, um,
15:26
there's, there's a renter's insurance policy and it basically covers
15:30
everything except the structure.
15:33
Bob: So that's if they have a renter's.
15:35
Policy
15:35
Sara: correct.
15:36
And it depends.
15:37
I think you can get structures coverage on a renter's policy just because of
15:42
what is defined as part of the building.
15:45
You know, if you bought a, you know, if you made improvements to
15:49
your, to your, uh, apartment or your condo, you know, that's part of
15:53
the realty, but that's still yours.
15:55
And so that should be covered under building, but they are having,
15:59
what I'm seeing with renters is they're having issues with the
16:01
landlords not doing the necessary.
16:05
repairs, cleaning, taking the situation seriously with
16:08
respect to, to the building.
16:11
And in those instances, you know, we have the implied warranty of habitability.
16:16
Bob: So that's from a landlord, the owner of the property,
16:18
the employer, implied warrant.
16:20
It means you got to make good on your property, right?
16:23
If you're renting to somebody and it's implied that you'll do in good faith.
16:27
So you have landlord.
16:28
So I get this question a lot, like landlord won't let
16:30
me back onto the premises.
16:31
Even to sift through my ashes.
16:34
My landlord won't let me back in or not Rehabbing the building yet
16:38
if it wasn't totally burnt down What do we do in these situations?
16:42
Sara: Read your lease read your rental agreement go to the contract those
16:46
there are laws that apply to landlord tenant relationships But then there's
16:49
also the contract and that's what I say with insurance claims too is
16:53
what it's what does the policy say?
16:54
Bob: The
16:54
policy is a contract between you and your insurance company.
16:57
Sara: Yes
16:58
Bob: Renter, look at your insurance between you and the landlord,
17:00
whether you're a business or a renter of your personal home.
17:06
Sara: Yeah, no, I mean and especially too because some language, you know,
17:09
the language in those leases differs um, but at the you know, and often um,
17:13
There is a provision that if the property becomes uninhabitable that the tenant
17:19
is allowed to to break the lease And then can you know go free and clear?
17:24
Um the the rules regarding if somebody does do that the rules regarding regarding
17:29
um security deposits Obviously still apply so it's and I will say with the
17:33
landlord tenant issues There are a lot of organizations and agencies that specialize
17:39
in helping tenants and advising them of their rights so I definitely encourage
17:44
anybody that's got issues with their landlords to to reach out because Um, I
17:49
think that is definitely a particularly vulnerable vulnerable population A segment
17:54
of the population that's being affected.
17:56
Bob: So how about this situation this last topic just Homeowner property
18:02
owner has a renter It burns down.
18:05
Homeowner has a policy for rental value, loss of rental value.
18:10
Now they weren't living there, they were renting it.
18:13
Can they use that, that coverage?
18:17
It's almost like a loss of income for the rental.
18:19
Sara: What does the policy say?
18:20
Bob: Uh, the typical policy just says like, So,
18:24
Sara: so, Because they weren't living there.
18:26
Right, and so a typical policy recognizes that, that that is a common occurrence.
18:30
And so they'll have, that's the true loss of use or fair rental value coverage.
18:35
Um, so if you've got an existing tenant and there's a lease and it
18:39
demonstrates how much you would have received in rent, you can submit
18:42
that to your insurance company.
18:44
Okay.
18:44
Um, and they would be required to reimburse you for that.
18:47
That being said, before, I, I, again, consult your policy before you, you
18:53
take that step because it, there could be gray areas or it could be
18:57
sort of, you know, you didn't realize it didn't have that coverage, um, so
19:01
you just always want to be, you know, very careful and do your due diligence
19:05
and, and every step of the claim.
19:07
Bob: Yeah.
19:07
And that's where you get that number.
19:08
You divide it by however many months and see if you have enough time
19:11
to rebuild during that process.
19:13
Okay.
19:13
Thanks.
19:14
and still be able to recruit your fair rental value.
19:17
Sara: Right.
19:17
Bob: Great.
19:18
Um, so again, how do people reach you, Sarah?
19:20
Sara: Um, they can, uh, they can, uh, they can send out the bat signal right now.
19:26
Um, they can't, I I'm on Instagram at the insurance Avenger.
19:30
Um, I can be reached at Sarah at the insurance Avenger.
19:34
com.
19:34
Um, and I, if people really want to find me, I'm sure they can get
19:38
ahold of me one way or another.
19:39
Bob: Yeah.
19:40
And you know, Sarah's a new member coming to justice HQ.
19:42
We appreciate your insight and building the community and teaching everybody
19:47
about insurance and stuff like this.
19:48
Cause I learned so much on this episode.
19:50
And you know, sticking with the Avengers, I think you'd
19:52
love in a lot of our Locations.
19:54
Like we have a group in the orange County one, and we have a giant Hulk that's
19:56
actually down in the basement here.
19:57
So there's a lot of like Avenger Jason stuff going on.
20:01
Sara: Oh, totally.
20:01
No, it's a lifestyle.
20:02
Bob: It's a lifestyle.
20:04
Well, thank you for, thank you for fighting for folks.
20:06
Like Sarah's been like literally boots on the ground, helping
20:08
people, you know, whether in a church or like in a parking lot.
20:13
Um, giving people advice
20:14
Sara: outside of the back of my, my minivan.
20:16
Bob: Yeah.
20:17
Sara: Shout out to the minivan mafia.
20:18
Bob: Yeah.
20:19
Many vans are awesome.
20:19
You can put a lot of stuff in there.
20:20
Sara: Oh, don't get me started.
20:22
I could do a whole episode on that.
20:24
Bob: All right.
20:24
Thank you for listening to this episode of the justice team podcast
20:27
on the justice team network.
20:28
You can go to the justice team network.
20:29
com or you can watch on YouTube or anywhere it is, but please reach out
20:32
to Sarah with any insurance questions.
20:34
Thank you all very much.
20:35
Sara: so much.