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Re: Our Insurance company is making us homeless!

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Posted by tonyb on August 08, 2001 at 05:25:27:

In Reply to: Our Insurance company is making us homeless! posted by Anne on August 07, 2001 at 21:10:00:

: Our house was destroyed by fire in April of 2000 - Farmer's, our insurance company told us they would pay for our rent for one year while our house was being rebuilt. As the contractor (recommended by the insurance company.... yeah, I know, my first mistake) and architect (recommended by the contractor, my second mistake!) have been working incredibly ineptly and slowly the reconstruction was only just beginning after a year! - so they extended it for two months. The house is still nowhere near being finished - it will be another four months or so - but the insurance company says they will no longer pay for our housing. They said that the contractor will have to pay for it - but now he is refusing ! We just heard today that in four days my three kids and I will have no place to live! I will take whatever legal action is necessary but don't know where to start. Isn't the insurance company obligated to house us until we can move back into our rebuilt home? Please e-mail me any suggestions on how to deal with this - consmuer groups in SF Bay Area? Thanks.

The insurance company has the option to take, repair or replace the insured property with other of like kind and quality within a reasonable time on giving thirty day notice after receiving the proof of loss. However, this section has seldom been enforced because of all the problems and questions it creates. Just to name a few: when the insurance company assumes the role of guarantor (when one party promises to make another secure in the possession, continued enjoyment, or the like, of something), it runs the risk and burden of policyholder satisfaction. This can become very difficult if after repair or replacement the policyholder is not satisfied. The complaint of dissatisfaction is with the insurance company, instead of with the repair or replacement firms had the company settled directly with the policyholder. How does the company ever convince the policholder of satisfaction? Does the company's right to possession wipe out the rights of ownership of the policholder ? If the policholder doesn't have the right to abandon the property, and doesn't have the right to keep the property, at what price insurance?

Where a loss occurs and the insurance company authorizes repairs, the contract to pay the loss is superseded by the contract to repair, and the one year time limit for the policyholder to sue the insurance company would not apply: Lee v. Safeco Insurance Co., 241 S.E. 2d 627 Ga. Ct. App., 1978.

If the insurance company did not enact its option to repair mentioned above, there may still be some responsibility by the insurance company for repairs gone wrong because of its representation that certain individuals were competent to preserve and repair the insured property:

The policyholder's lawsuit against the insurance company for fraud, conspiracy to defraud, bad faith, and intentional infliction of emotional distress based upon the insurance company's representation that certain individuals were competent to preserve and repair the policyholder's house and household furniture, when, in fact, these individuals were not competent and did work in a shoddy and unworkmanlike manner, causing more damage, was not subject to the one year time limit to sue: Murphy v. Allstate Insurance Co., 83 Cal. App. 3d 38, 147 Cal. Rptr. 565 Cal. Ct. App., 1979.

You may want to talk with an attorney.

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