January 10, 2008

1. Wildfire Roadmap to Recovery:
Wildfire Roadmap to Recovery:
Meeting #4, January 10, 2008
Meeting #4, January 10, 2008
Rancho Bernardo Community Presbyterian Church
Rancho Bernardo Community Presbyterian Church
Strategies for dealing with underinsurance
Strategies for dealing with underinsurance
Karen Reimus
www.unitedpolicyholders.org

3. Fine print:
Information provided in this program is intended for
general educational purposes only. It should not be
construed as legal advice.
The speakers at today’s program are volunteering their
time as educators.
Neither United Policyholders nor the Rancho Bernardo
Community Presbyterian Church endorse or warrant the
message or services of any volunteer speakers.

4. Underinsurance: The bottom line
Underinsurance has become such a common problem after large scale
disasters that United Policyholders has an entire section of our website
devoted to the subject. (“Claim Tips” section, “Underinsurance Help”)
Homeowners use a variety of strategies to cope
You will hear rumors about other people’s outcomes
There is no “one size fits all” path
Pursue all avenues to get the insurance company to cooperate informally
If you have a strong case, use our civil justice system – a cornerstone of our
democratic system.
If you do not have a strong case, pursue alternatives
United Policyholders is working hard to help current and future disaster
survivors avoid and deal with this problem

5. Scoping out and adding up your total losses
is important…whatever path you choose
WHAT:
A package of documentation that includes:
- A well prepared scope of loss (Dwelling)
- Personal Property inventory (Contents)
- Receipts for all incurred expenses (All categories of coverage)
WHY:
1) You’ll need this for whatever strategies you use (insurance, tax code provisions, loans, etc.)
2) Replacement cost policies pay for the cost to replace what you had. Your insurer doesn’t
owe you full replacement unless you prove you have spent or will spend all you’re owed.
3) Your insurer may waive policy requirements and give you flexibility in using your policy benefits
but having a scope of loss/cost basis agreed upon up front makes it more likely they will.
** People run into trouble all the time when they try to negotiate building a different house BEFORE
there’s an agreement on the amount of money owed for the house they had and lost.
HOW:
1) Get ideas and guidance from your Disaster Recovery Handbook
2) Hire a qualified professional to prepare your dwelling scope of loss

6. Scope of loss basics:
WHAT: Defines, describes, details “as it was” dwelling loss
HOW: Trades/materials/quantities should be clearly
spelled out, format should look professional
WHY: The cost to replace your old home, “as it was” is generally
what your insurer owes. You need to know what that cost was
before you can negotiate to build something different.
- A scope of loss is not the same as an estimate
- A scope of loss should allow estimates to be prepared and compared
“apples to apples”
- A scope of loss is the basis for an independent, credible
repair/replacement estimate
- A professionally prepared scope of loss
can cost @ $3,000-$7,000

7. Paths others have used:
Private Construction Loans
SBA Loan – (DEADLINE past)
Group Rebuild
Building a smaller or cheaper home
Shifting non-dwelling insurance funds to fund
dwelling replacement
Manufactured and Modular homes
Casualty loss deductions permitted by the IRS

8. What are the alternatives to suing to
settle a claim dispute?
Mediation, Arbitration, Appraisal are three of the most popular
alternatives to insurance litigation.
In MEDIATION, the parties work with a third party to negotiate a
resolution of their dispute in an informal, voluntary process.
An ARBITRATION may be binding or non-binding, and is more
formal than a mediation. The arbitrator may dictate the result, or
simply work with the parties to reach a result.
APPRAISAL is a procedure mentioned in most policies as a way to
resolve a dispute over the value of a loss. It is done by a third party,
but may not be legally binding.

9. Pre-Mediation/Arbitration
“To-Do” List:
Seek a mediator/arbitrator who is experienced in litigating or resolving insurance
coverage and bad faith cases
Seek a mediator/arbitrator who is disinterested and reasonably priced.
Insist that the insurance company rep must have sufficient dollar authority
to pay what you need
Make sure to exercise your right to get copies of “all claim related
documents” in your insurer’s files prior to the mediation/arbitration.
(CA. Ins. Code sec. 2071)
Consult with or bring an attorney, especially if the insurance company is bringing
one
Keep your expectations low and be ready to walk away without settling. Many
disputes settle after the initial mediation/arbitration, so you may only be laying
the groundwork for a future settlement
Prepare, Prepare, Prepare
Giving the mediator/arbitrator a written summary of
your position in advance of the meeting is always very helpful
Don’t be intimidated – You are a powerful participant in the process

10. Our heartfelt thanks to:
The Rancho Bernardo Community
Presbyterian Church
All our UP Mentors and Sponsors
Tonight’s speakers

11. Taking Out A Private Construction Loan to Rebuild
and Firsthand Overview of the Rebuild Process
David R Shalinsky, PhD
drshalinsky@aol.com

12. Considerations for Paying Off
Existing Loan
Balance and interest rate on existing loan
variable or fixed rate
loan term/years remaining
In our case,
Variable rate
21 yrs remaining w/ $290K balance
Equity ≥ $450K
Initial insurance proceeds >$600K

13. Shalinsky Family
Growing anxiety
2/2005
March – November 2nd Floor framed
Hoping & Praying:
Ground Breaking 9/18/04
12/2003 Foundation 11/2004
Site cleared Poured 1st Floor framed
* * 6/14/04 12/2004
10/26/03 8/14/05
Firestorm Nov - May Blessing Land Leave of Home!
Dealing with change, change, change…
Absence
Paid off old home loan
Choosing architect/builders Choosing paints, decorations,
Designing home/ HOAs, Permit process furniture, decisions, decisions!
Securing new loan {Planning your move – Ordering
Secured construction Furniture, 3 – 4 month lag}
loan
Don’t forget the landscaping - 6 mo!

14. Construction Loan
Special incentives/discounts/sensitivity
Decided to shorten loan term
15 year term
fixed rate historic lows (4.87%, Spring 2004)
Some leverage for Rebuild situation
ultimately waived extension of fees when rebuild
lasted longer than 2 yrs
Be aware of the term: Clock is ticking
when loan closes (15 yrs from COE)
Got a nice surprise here!

15. Taking out an SBA Loan
Chick Osgood
cosgood@san.rr.com

16. My SBA Loan Experience
Strategy - Consistent, true message
Don’t depend upon it

17. My SBA Loan Experience -
continued
Told “Don’t pay off your mortgage”
Have to establish that you are under insured
But, SBA wants to be sure you have spent
insurance. (catch 22)
Owner-Builder complicates situation
(my situation).
Be prepared to wait. Keep log of calls.
Could be phone “on hold” for long time
Have to be qualified for loan

18. Participating in a
Group Rebuild Program
Jim Kuhlken
jkuhlken@rickengineering.com

19. From the Ground Up:
Utilizing contents money to rebuild
Julie Robinson
djrobinson4@san.rr.com

20. Whatever it takes…my experience
My strategy
First build the house and then worry about
filling it later…
Prioritizing funding
Maximize contents and insurance dollars
College daze all over…

21. Whatever it takes…my experience
continued
Contents money is yours today!
Work to get a full check paid.
I was not required to provide ANY receipts for
content replacement – they didn’t care…
Built my extensive list over 6 months
(available to share if you’d like, your kitchen probably looked a lot like
mine…)
Target the bottom line to exceed limits for full
payment

22. Building your Contents List –
not easy, but often necessary…
Mentally visit each area of house
Be careful not to underestimate qty, cost
Recommend outlining each item
Remember it’s REPLACEMENT cost, not
what you paid at the time…
Estimate depreciation to calculate bottom
line
Submit as partial
(since I still recall what I forgot to include…)

23. It’s your money…
Provide even a partial list ASAP to get
your money ASAP.
Once limits are met, don’t care how you
spend it…

24. Using the CDI Mediation Program
Lisa Yates
lyates@san.rr.com

25. CDI Mediation Program
Leone Tiffany
Chief of Consumer Services Division,
California Department of Insurance
tiffanyl@insurance.ca.gov

26. Break Out Sessions
Open to 9:30 pm: Firm Stop time
Upstairs:
State Farm : Dormer West
Farmers : Skylight West
Allstate : Upper Courtside East
Sanctuary