QUICK INFORMATION GUIDE TO WHY CITY PERMITS ARE VALUABLE TO YOUR HOME & TO KNOW YOUR RIGHTS AS A HOMEOWNER WHEN YOU FILE FOR AN INSURANCE CLAIM:

Why Building Permits Matter

We ensure that all safety procedures are carried out as required by the permits. Furthermore, construction permits ensure compliance with building codes and regulations. These codes are established to safeguard the structural integrity, fire safety, and accessibility of buildings.

A building permit is the official written authorization from the relevant City authority that a construction project may begin. For example, the City of Los Angeles requires a permit for any private property construction and/or alteration and in many cases even for repair work.

The size and complexity of the proposed work dictates how much information a given City will require before a requested permit will be issued. Small, straightforward projects typically require very little details while large, complex projects require fully developed plans to be reviewed and ultimately approved by the relevant authority.

Similarly, the cost for a permit is tied to the overall size of the project as it is based upon a small percentage of the total cost of the project. While some homeowners and/or contractors feel “pulling a permit” causes unnecessary delays to their project as well as increased costs, it is in their best interest to do so.

For instance, obtaining a building permit allows the City to confirm the proposed work to be performed is in conformance with all applicable building codes and standards. As part of that process, City inspectors will periodically visit the project site to ensure that the work is in fact being performed correctly.

For obvious reasons it is much better to discover and correct any construction related errors while work is ongoing rather than after it has been completed and/or covered up.

Additionally, should a homeowner desire to sell his or her home in the future, making sure all work was performed pursuant to a permit ensures the homeowner can maximize the value of their home. Conversely, if it is disclosed to potential buyers that there exists unpermitted work on the property that typically causes the potential buyers to provide significantly lower purchase offers. This is due to the fact that City officials can and often do require the purchaser to bring the un-permitted work commissioned by the previous homeowner “up to code”.

When the prior homeowner does not disclose that there was unpermitted work performed on the property and the new homeowner later discovers it such a scenario often results in expensive litigation that requires the previous homeowner to reimburse the new homeowner for all costs and fees associated with correcting the unpermitted work.

The relatively small amount saved on permit fees is typically eclipsed by the liability imposed on the prior homeowner for not having the work performed the right way the first time around.

It might seem like a lot of legwork to make sure you have the proper permits in place before, during, and after construction. But taking care of the permits right away can save a lot of hassle down the road. Unapproved constructions, or work completed by contractors who don’t have the proper permits, can actually decrease the value of your home.

Not only that, but because your property taxes are generally based on the value of the improvements made to the land, failure to get the appropriate permits can leave you on the hook for unpaid property taxes later on.

So, as you can see, permits can have a big impact on your finances if you ignore them. 

For example, if you don’t have an electrical permit on file for any electrical modifications in your home, you couldn’t collect insurance if the cause of a fire is determined to be non-permitted work. Permits help when it’s time to sell a home, since potential homebuyers will want to be sure the appropriate permits exist for any modifications or additions to the home.

Most importantly, building codes and permits are put in place for your health and safety. They set forth minimum requirements for the types and sizes of materials to be used to meet safety standards. 

These are all really important reasons why the permitting process works in your favor. If you’re hiring a contractor to build your addition, then ensuring that your builder is working with the necessary permits is a pretty great clue that they’re a legit company doing quality work. Win-win!

If you’re making significant changes to your home, you need to have permits, as well as all the proper building inspections during the process and at the project’s completion. In addition to the traditional building permit, which gives you and/or the contractor the permission to build or add onto the home, each specialty trade, such as HVAC, electrical, or plumbing, has its own permit. Before building a home addition, brush up on the required permits.

If the system seems like a confusing web of applications and inspections, you’re right. That’s why we don’t recommend doing it yourself. Keep in mind that “the one who pulls the permit is responsible for the work.” 

That means if you pull the permit yourself, or if your contractor pulls it in your name, then YOU are responsible for the work, even if you didn’t do it. This leaves lots of room for error on the contractor’s part, and some contractors may not accept responsibility for mistakes.

For that reason, you should hire an experienced, locally licensed contractor who does quality work and knows the system. The two keywords here are “experienced” and “local.” 

Just as a certified public accountant or a lawyer has to pass an exam and prove their qualifications, a properly licensed contractor has to have certain qualifications to pull a permit. These include having a master technician on the team and meeting selected screening qualifications.

Local means hiring a contractor who works frequently in your municipality. Permit and building requirements vary from town to town.

What Permits Are Required for Residential Additions?

If your house is feeling a bit cramped and you’re looking to expand your home’s footprint, you’re first going to need to get the proper clearance from your local authorities.

You’ll need to make sure you pull the proper building permits for your home addition.

Fortunately, it’s not that hard to get the go-ahead on your dream project. Permitting, above all, helps to ensure safe, legal, city code approval, quality construction—and that the addition rests entirely on your own property. (No squabbling with the neighbors over where your property line ends and theirs begins!).

Zoning

When you’re planning to add on to your home, one of the first things you’re going to need to confirm is zoning for the kind of construction you want. Some cities and municipalities, for instance, will limit the amount of square footage permitted on a single lot. Others may restrict the number of detached buildings allowed on the same parcel of land. And still others will specify that only certain types of constructions are allowed within that zone. 

So you should check with your local officials before you even begin construction to make sure your project meets your property’s zoning requirements. You might be required to purchase a zoning license to go ahead with the expansion, which will usually involve additional steps, such as site inspections to ensure that your land’s water, septic, and electrical systems can safely support the new addition. 

Plan Review

After you’ve ensured your project meets zoning requirements, you’re going to need to submit a building plan for officials to conduct a plan review. This will generally include a drawing of the proposed addition, as well as details regarding construction. Again, this is all about safety and legality. 

Inspectors consider issues such as structure, foundation, and location. They’ll want to ensure there is proper clearance between the new addition and other structures to minimize fire risk. And they’ll also want to ensure the building plan works for the addition’s intended purpose. For instance, an attached bedroom with a half-bath will need to meet different standards than a detached guest house complete with a kitchen, bathrooms, and gas heating.

Post-Construction Inspections

The permitting process doesn’t end once you’ve received clearance to start your project, though. At the very least, your town or municipality will require an inspection to ensure that the work went as planned and according to the required code, health and safety standards. Generally, this is for the safety and well-being of all citizens. .

Why Permitting Matters

It might seem like a lot of legwork to make sure you have the proper permits in place before, during, and after construction. But taking care of the permits right away can save a lot of hassle down the road. Unapproved constructions, or work completed by contractors who don’t have the proper permits, can actually decrease the value of your home and could possibly make you liable to repay and become engulfed in a lawsuit by the new homeowners. .

Not only that, but because your property taxes are generally based on the value of the improvements made to the land, failure to get the appropriate permits can leave you on the hook for unpaid property taxes later on.

So, as you can see, permits can have a big impact on your finances if you ignore them. For example, if you don’t have an electrical permit on file for any electrical modifications in your home, you couldn’t collect insurance if the cause of a fire is determined to be non-permitted work. Permits help when it’s time to sell a home, since potential homebuyers will want to be sure the appropriate permits exist for any modifications or additions to the home.

Most importantly, building codes and permits are put in place for your health and safety. They set forth minimum requirements for the types and sizes of materials to be used to meet safety standards. 

These are all really important reasons why the permitting process works in your favor. If you’re hiring a contractor to build your addition, then ensuring that your builder is working with the necessary permits is a pretty great clue that they’re a legit company doing quality work. Win-win!

Example: Permitting for a Kitchen Remodel

You don’t have to add on to your home or construct an entirely new building on your property to require permits, though. In some cases, even an extensive remodeling project will require permitting. 

This is especially true of kitchens and bathrooms, where the renovation may place significant demands on your gas, electrical, water, and/or plumbing systems. 

Below are some examples of the kinds of permits that might be required for an extensive kitchen remodel:

• Structural: This is necessary if you’re making major modifications that include blowing out walls or building new ones. 

• Electrical: Even if you’re just moving one plug or installing any new fixtures, you need an electrical permit. If you’re doing an electrical upgrade, make sure you bring everything up to current building code standards. 

• Plumbing: If you are adding a redesigned laundry room that includes a new location for the sink, you will need a plumbing permit. 

• Gas permit: If your new stovetop has a gas grill, you will need a gas permit to run a new gas line. If it’s electric, it will fall under the electrical permit.

• Local permits: You will need any other permits required by your township or municipality.

Understanding Home Addition Permits

Dealing with paperwork isn’t the most exciting way to spend a weekend. But the permitting process isn’t just a legal requirement—it’s also great protection. Permits will help ensure your cozy new bedroom or inspiring detached artist’s studio is safe, solid, and inviting for years to come!

Remodeling or adding square footage to your home can be an exciting endeavor, promising to enhance your living space and potentially increase your property’s value. However, amid the enthusiasm for your home improvement project, it’s crucial not to overlook a critical aspect: building permits. In this article I delve into the importance of permits for homeowners considering property updates, exploring the reasons for obtaining permits and the key considerations in the permitting process.

Benefit of Obtaining Permits

The first question many homeowners ponder is whether they truly need permits for their remodeling or expansion projects. The answer, in most cases, is a resounding yes. Obtaining permits isn’t just a bureaucratic formality; it’s a legal requirement in many jurisdictions.

Building codes are established to ensure safety, structural integrity, and compliance with zoning regulations. By obtaining permits, homeowners demonstrate their commitment to adhering to these standards, safeguarding their investment and the well-being of their household.

Beyond legal obligations, obtaining permits is essential for several reasons. First, it ensures compliance with building codes, which are updated periodically to reflect advancements in construction practices and safety standards. By adhering to these codes, homeowners can mitigate risks and liabilities associated with substandard construction practices.

Second, obtaining permits provides legal protection. In the event of property damage, personal injury, or disputes with neighbors, having permits in place serves as tangible evidence that the remodeling or expansion was conducted in accordance with established regulations. This can help shield homeowners from potential lawsuits and liability claims.

Moreover, obtaining permits can have implications for insurance coverage. Insurance companies may require proof of permits for home improvement projects, particularly those involving structural alterations or square footage additions. Failing to obtain permits could jeopardize insurance coverage, leaving homeowners vulnerable in the event of accidents or damages.

Finally, permits can positively impact resale value. Prospective buyers are increasingly vigilant about the legality and quality of home improvements. Properties with properly permitted renovations often command higher prices and attract more discerning buyers who value transparency and compliance.

Also, buyers who are financing their purchase will be depending on a home appraisal to justify their purchase price. Non-permitted additions will not be taken into consideration by appraisers, potentially reducing the amount of financing available. This can force buyers to increase their down payment to cover the difference between the offer price and the appraised value. This may reduce the number of purchase offers and thus the final selling price.

Permits for Every Project?

While there are many projects where I would strongly advise you to apply for permits, there may be cases where the cost and effort aren’t worth it. Small home updates that aren’t dealing with structural elements can often be performed by a homeowner or a handy ma’am. Replacing kitchen cabinets or countertops, updating flooring, or installing new fixtures probably don’t warrant the effort to obtain permits.

However, any time you are contemplating any change to the footprint of your home by adding square footage, you should definitely have the work permitted to ensure you’ll receive credit from an appraiser for the addition when you go to sell your home.

Considerations in the Permitting Process

While obtaining permits is essential, navigating the permitting process can be daunting for homeowners. Here are some key considerations to keep in mind:

1. Research Local Building Codes and Regulations: Before starting your remodeling or expansion project, familiarize yourself with local building codes and zoning regulations. Each jurisdiction may have its own requirements and restrictions governing construction projects, so it’s crucial to understand the rules applicable to your area. Fortunately most cities now offer online permitting systems to make it easier to research and apply for permits. 

2. Understand Permitting Costs and Fees: Permitting fees vary depending on the scope and complexity of the project, as well as local regulations. Budgeting for these costs upfront can help avoid surprises and delays during the permitting process.

3. Submitting a Complete and Accurate Application: When applying for permits, ensure that your application is complete and accurate. Provide detailed plans, specifications, and other required documentation to expedite the approval process and minimize the risk of rejection or delays.

4. Timelines and Approval Process: Be aware of the timelines and approval process for permits in your jurisdiction. Some projects may require multiple rounds of review and approval, so it’s essential to factor in sufficient time for the permitting process when planning your project timeline.

5. Inspections and Compliance Checks: Once permits are obtained, be prepared for inspections and compliance checks throughout the construction process. Building inspectors will verify that the work is being carried out according to approved plans and specifications, so ensure that your contractor is aware of these requirements.

6. Potential Challenges and Appeals Process: In some cases, permit applications may be denied or subject to conditions that pose challenges for homeowners. Familiarize yourself with the appeals process and options for resolving disputes or addressing objections raised by regulatory authorities.

Conclusion

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Obtaining permits is a crucial step for homeowners considering remodeling or adding square footage to their homes. Beyond meeting legal requirements, permits offer numerous benefits, including ensuring compliance with building codes, providing legal protection, enhancing resale value, and facilitating future inspections and maintenance. While navigating the permitting process may pose challenges, thorough research, careful planning, and adherence to regulatory requirements can help homeowners successfully navigate this critical aspect of home improvement projects.

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"Insurance companies to give bonuses to adjusters for lowering claim payouts, but it's considered an unacceptable business practice by many courts

. Insurance companies may use bonuses and other incentives to encourage adjusters to save money, but these practices can lead to bad faith claims and underpayment of policyholders.  

Some ways insurance companies may encourage adjusters to save money include: 

• Partial payments
  Adjusters may pay policyholders a portion of their claim now and the remaining amount later. 

• Claim payment goals
  Insurance companies may set arbitrary claim payment goals for adjusters and base promotions and salary increases on whether they reach those goals. 

Insurance companies are businesses that aim to maximize profits by minimizing payouts. However, an insurance policy is a contract between two equal parties, and policyholders have the right to be fully reimbursed for claims that meet the terms of their policy

Claim Resolution Regulations

There are state and federal regulations in place for how quickly an insurance company must acknowledge your claim in addition to rules for timely payment.

In California, private insurance companies are required to acknowledge the claim within 15 days. Once a claim has been acknowledged, it must be accepted or denied within 40 days. If a claim has been accepted, the insurer must make a payment within 30 days after a settlement has been reached.

This is only for informational purposes:

(h) Once an insurance company accepts a claim, either fully or partially, they must then immediately pay the accepted amount to the claimant, and in any case, no later than 30 calendar days after acceptance,.....

Upon acceptance of the claim in whole or in part and, when necessary, upon receipt of a properly executed release, every insurer, except as specified in subsection 2695.7(h)(1) and (2) below, shall immediately, but in no event more than thirty (30) calendar days later, tender payment or otherwise take action to perform its claim obligation. The amount of the claim to be tendered is the amount that has been accepted by the insurer as specified in subsection 2695.7(b). In claims where multiple coverage is involved, and where the payee is known, amounts that have been accepted by the insurer shall be paid immediately, but in no event more than thirty (30) calendar days

https://www.law.cornell.edu/regulations/california/10-CCR-2695.7#:~:text=(h)%20Upon%20acceptance%20of%20the,and%20before%20payment%20of%20benefits.

THIS IS ONLY FOR INFORMATION PURPOSES: 

LABOR DEPARTMENT REQUIRES ALL LABOR WORKERS REQUIRED TO BE PAID IN STATE OF CALIFORNIA 

All Californians are entitled to fair wages for the labor they perform for employers. In this context, labor refers to the services rendered by the employee for an employer. There are a number of different ways in which employees are compensated for the work they do. Some are paid hourly and others work for fixed salary. Some employees such as salespersons work for commissions and others who work on a contract basis may get paid per project. The word "wages" also includes other benefits employees receive as part of their compensation packages such as sick time, vacation pay, room, board, health insurance and so on.

Table of Contents

• The Right to Wages

• When Must Wages Be Paid?

• When Are Final Wages Due?

The Right to Wages

Under California laws, every worker is entitled to receive fair wages regardless of their immigration status. Employees may be paid what was agreed to in a contract or they may be paid under the California Labor Code.

Contract wages: Many workers in California accept employment at a wage that is promised to him or her under a contract. This is a binding agreement between the employer and the employee. In most cases, the promise to pay wages assumes the form of a formal written contract. However, an oral agreement is also enforceable when it comes to earned wages.

Wages under labor laws: California's Labor Code sets forth the right for employees to earn wages including minimum wage and overtime wages. It is important to distinguish that while wages are paid to employees, independent contractors receive payments for work performed under a contract. Such compensation is not considered as a "wage." But, when an employee is wrongly classified as an independent contractor, he or she is entitled to be paid the wages that are required under the law.

When Must Wages Be Paid?

California law also imposes requirements regarding when employees should be paid. Most California employees must be paid at least twice a month. Employers must set up regular paydays for their employees and let employees know clearly when they will get paid. Under California law, wages earned between the 1st and 15th day of the month must be paid between the 16th and 26th day of the same month.

Wages earned between the 16th and the last day of the month must be paid between the 1st and the 10th day of the following month. According to California overtime laws, wages for overtime earned during the work period must be paid no later than the regular payday for the next work period. Exempt employees, typically those who work in administrative or supervisory roles, may be paid on a different schedule such as once a month.

When Are Final Wages Due?

When an employee is provided with a final paycheck depends on whether he or she was fired or quit. When an employee is fired, he or she must be paid all wages earned up to and including the date of termination on the day of termination. When an employee quits and gives at least 72 hours notice, they must be paid on their last day. Employees who quit without giving notice must be paid their final notice within 72 hours after their final day of work. The final check must also include the employee's unused vacation time.

THIS IS ONLY FOR INFORMATIONAL PURPOSES:

Insurance Bad Faith in California

California law requires your insurance company to investigate, process, and pay your claim fully, promptly and in good faith and deal fairly with you at all times.  CA Ins. Code 790.03, 10 Cal Code of Regs 2695.9.  “Bad faith” conduct is “unreasonable” conduct.  When you’ve suffered a loss, and an insurance company is being unreasonable in handling the claim you filed for compensation for that loss, they are acting in “bad faith.” The questions for most people who’ve been victimized by bad faith are:  What harm did the insurer’s unreasonable conduct cause and is it practical to pursue a lawsuit to remedy the conduct.

California has more laws to protect insurance policyholders than any other state in the country.  These laws tell insurers what they must, can and cannot do. These laws are found in court decisions (“case law”), the California Insurance Code and the California Code of Regulations.

There are many laws that tell companies and their representatives how they must behave when insured property is damaged and a policyholder files a claim. Although insurance companies are required to know and abide by these laws, some companies and adjusters routinely ignore or violate these laws when handling claims. It is often up to you – the consumer – to remind them of your rights and insist they meet their obligations to investigate and pay your claim fairly, fully and timely.

If you arm yourself with basic knowledge about the laws that protect you and have a good paper trail on the history of how your claim has been handled, you can speed up your settlement and improve your odds of getting paid what you’re owed. If your efforts to get your insurer to be reasonable are not successful, and you find a qualified attorney to prosecute a lawsuit on your behalf, that lawsuit can state that the insurer breached the covenant of good faith and fair dealing and owes you compensation

At the end of these tips, we tell you how to get free copies of the laws that protect homeowners in California. Your insurer was supposed to give them to you 15 days or less after you filed your claim. (CA. Ins. Code sec. 790.034 (b)) Just in case they didn’t, here’s a review of the ones that may help you settle and get back home. There are many more laws than the ones we list here:

For specifics on claim rules, deadlines and what you’re owed, you’ll want to know about California’s Fair Claim Handling Regulations. They spell out:

• Deadlines for responding to letters and phone calls

• Deadlines for your insurer to pay or deny

• Deadlines for submitting paperwork to prove your loss

• What information your insurance company must give you

• What information you must give your insurance company

 “GOOD FAITH”

You are legally entitled to be treated in “good faith” by your insurance company and its representatives at all times. This means your insurer must be considerate of your needs. It must communicate fully and honestly with you about the policy it sold you and about rights and duties relating to your claim.  In turn, you are legally obligated to be honest and to cooperate with reasonable requests for information relevant to your claim. Cal. Insurance Code sec. 790.03 (h) is the main place to read these requirements. They’re also included in portions of Cal. Insurance Code sec. 2071.

All representatives of your insurance company are legally required to tell you the truth. This includes in-person conversations and all communication by phone, letters, emails and all advertising and printed materials. This means they must be honest about what they sell you, what you’ve paid for, and what you’re entitled to if you file a claim. An insurer “shall not cause to be issued, circulated or used, any statement that is known, or should be known, to be a misrepresentation” of the benefits or privileges of the policy or future dividends payable under the policy. [Cal Ins Code 780] No insurer shall misrepresent to a “claimant pertinent facts or insurance policy provisions relating to any coverages at issue”. [Cal Ins Code 790.03(h)(1)]

No insurer shall discriminate in its claim settlement practices because of a claimant’s age, race, gender, income, religion, language, sexual orientation, ancestry, national origin, physical disability, or upon the territory of the property or person insured.  [Cal Code of Regs 2695.7]

You are entitled to a “good faith” settlement.  Every insurer must attempt “in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear”.  [Cal Ins Code 790.03 (h)(5)] An insurer cannot make an “unreasonably low” offer, that is, attempting to settle a claim “for less than the amount to which a reasonable person would have believed he or she was entitled by reference to written or printed advertising material accompanying or made part of the application”.  [Cal Ins Code 790.03]

Your insurer must conduct a reasonable investigation on its own and consider all evidence you have submitted (such as your inventory lists, photographs, blueprints, independent scopes of loss, repair estimates, and appraisals on antiques, art or jewelry) in making the settlement offer.  [Cal Code of Regulations 2695.7 and 2695.9] Depreciation/Actual Cash Value holdbacks must be reasonable and not excessive.

PROMPT, HONEST & COMPLETE COMMUNICATIONS

You are entitled to prompt, timely communications from your insurer.   The company (and all its representatives) must respond to your communications “immediately, but in no event more than 15 calendar days” with “a complete response based on the facts then known.”  Any question you ask, and any request you make must be responded to by the insurer within 15 calendar days.

You should get in the habit of sending your insurer letters or emails, so there is a record of who said what and when.  That doesn’t mean you should stop talking to your adjuster, but if you discuss something important on the phone, immediately follow up with an email confirming the conversation.  If you request copies of your current policy and policy history, including previous policies, policy upgrades, notices of changes, etc.  (something UP highly recommends you request in writing); your insurer must respond to your request within 15 calendar days.  [Cal Code of Regs 2695]

Your insurer must tell you about all deadlines that apply to your claim and the fact that there is a deadline for filing a lawsuit against them.  [ Cal Ins. Code 2071 and Cal Code of Regs 2695.7] Once that deadline passes you lose the right to sue them, even if they have handled your claim in violation of the law.  That deadline is called a “statute of limitations” and its purpose is to provide finality and keep things moving forward.  There is one deadline for suing an insurance agent and a different one for suing an insurance company, but to find out exactly what yours is – you’ll need to consult with an attorney before the one-year anniversary of your loss.  Why? Because in the state of California it’s tricky.  There’s something called “tolling”.  Your deadline is “tolled” (postponed) while your claim is still being processed, but once they deny it – the clock starts again.  An insurer cannot mislead you about this but it’s a common source of confusion.  [Cal. Ins. Code 790.03]

FAIR CLAIMS PROCESS

You do not have to use the exact forms provided by your insurer to do your contents list.  A legible list with approximate values and ages of each item must be accepted by your insurer.   An insurer cannot ask for unreasonable “proofs of loss” or secondary proofs.  For example, if you provide photographs or video of items in your home, you cannot then be compelled to provide receipts as well if they contain essentially the same information.  [Cal. Ins. Code 790.03]

You have a right to receive a copy of certain claim-related documents contained in your file.  An insurer shall “notify every claimant that they may obtain, upon request, copies of claim-related documents…” including construction estimates, photographs and the documentation backing up their estimates and “all other valuation”.  This includes information about how your contents and construction estimates may have been depreciated.  [See “Requirements in case loss occurs” in Cal Ins Code 2071.][1] The only thing you are not entitled to receive is attorney-client privileged communications and their attorney’s work. This means valuations, photographs, measurements, adjustor notes and reports, contents depreciation schedules, construction depreciation schedules, materials estimates, etc. are all part of your claims process, and you are entitled to receive complete copies of these so you can review them.

COOPERATIVE INVESTIGATION

Keep in mind, the insurer has a responsibility to gather as much information as needed to fulfill their end of the claims process and you have a responsibility to cooperate in their investigation.  You do not have a responsibility to cooperate with unreasonable requests for information or harassing tactics, but you are obligated to answer claim-related questions about your loss.  If you’re asked to do a telephone interview after you’ve already given a recorded statement, you may ask for written questions to be sent to you so you can answer them in writing.  United Policyholders publishes separate tips on Examinations Under Oath. Visit www.uphelp.org and search for that term, if you are asked to sit for an Examination Under Oath.

ADDITIONAL/TEMPORARY LIVING EXPENSES/LOSS OF USE

If your insurer threatens to cut off or terminates payments for your temporary housing expenses before you’re able to move back into a safe and habitable home, that may be unreasonable conduct/bad faith.  If your insurer won’t pay for housing of a comparable size/quality to what you lost, that also may qualify as bad faith.

ADJUSTING AND PAYING YOUR DWELLING CLAIM

No lowballing: An insurer may not offer or force you to accept a settlement offer that is “unreasonably low”.  Your insurer owes you the amount that will restore the damaged property to no less than its condition before the loss, in a manner of good workmanship and industry standards, and the rebuilding costs are accurate and representative of the costs in the local market area up to policy limits, including all extended coverages, endorsements, etc.  An insurer cannot substitute cheaper materials or workmanship in estimating or having your home rebuilt.  For example, an adjuster cannot put down laminate counters if you had marble, shave off ten feet from the length of a room, or estimate for single-paned windows when you had double-paned windows.  [Cal Code of Regs 2695.9]

Independent estimates: If the scope of loss, repair or replacement estimates prepared by the insurer seems unreasonably low, you have the right to get an independent reconstruction estimate (preferably from a forensic construction company with experience in estimating re-building, rather than new construction, as disaster-loss sites have their own set of issues, etc.) and submit it to the insurance company.  (The estimate may be reimbursed under your policy as a claim-related expense, so check.)  What happens next? Your insurer can 1) pay the difference between their estimate and yours; 2) at your request, recommend a contractor who can rebuild your home in the same materials and workmanship to return it to a “pre-loss condition” for the insurance company’s price, or 3) the insurer can “reasonably adjust” your contractor’s estimate.  [Cal Code of Regs 2695.9]

Settling on the replacement cost of your original home and using those funds to buy elsewhere: CA. Ins. Code 2051.5(c) allows a total loss claimant to use replacement cost funds to rebuild elsewhere, or buy a replacement home instead of rebuilding.  Because it is a fairly new law, your adjuster/insurer may not be aware of it and there may be disagreements and confusion.  If you want to use this option, we strongly recommend that you get an independent estimate to document the cost to replace the home you had – even though you don’t want to replace it at the old location.  Once you agree upon the amount owed, you can then use that amount to buy a replacement home instead of rebuilding.

New construction and disaster re-construction costs in many areas are often much higher than the purchase price of another home in the area.  Additionally, homes in other areas, even other states, are often less expensive, so it may make economic sense to purchase a replacement home, rather than rebuild.

CONTRACTORS

Your insurer cannot require you to have your property repaired or rebuilt by a specific contractor or repair firm.  Only if you expressly request referrals can an insurer provide them and they must inform you in writing that you have the right to choose a repair individual or entity.  If you choose the one recommended by the insurer, the individual or entity must restore your damaged property back to its pre-loss condition in a manner of good workmanship, acceptable trade standards and at no additional cost to the claimant than stated in the policy or allowed by California law.  [Cal Code of Regs 2695.9]

FAIR DEPRECIATION

An insurer can only apply depreciation to things that normally wear out.  They cannot reduce your benefits by depreciating things that would normally not be replaced over the useful life of the property such as framing, the foundation and the expense of labor to repair your property.  You have the right to know how the depreciation was calculated, what it was based upon, and how they reached their settlement amounts. [Cal Ins Code 2071 and Cal Code of Regs 2695.9]

RULE OF THUMB

If your insurer refuses to make a payment you believe you are entitled to, ask them to show you where in your policy it states you are not entitled to it.  Also, if your insurer quotes some strange reason for depreciation (such as the California community fence “rule”), ask them to provide you with a written copy of the law.  Any type of depreciation or rejection of any part of your claim must be backed up by the insurer with verifiable dollar-valued documentation, not just because they said so.  Ask for that documentation.  Sometimes insurance companies assert policy provisions or claim rules that are illegal and cannot be enforced.

EXAMINATION UNDER OATH

If you are asked to provide an “Examination Under Oath”, an insurer may only ask you questions that are “relevant” to processing your claim.  You are entitled to a copy of the transcript and tape (if recorded) and have the right to clarify or rectify the answers you gave under oath.  You may also ask for the questions they are going to ask in advance, however your insurance company is not legally obligated to give them to you. [Cal Ins. Code 2071]

COMPLAINTS, ATTORNEYS & LITIGATION

An insurer cannot retaliate against you for making complaint to the California Department of Insurance, threaten or withhold payments until the complaint is withdrawn, nor can they threaten or intimidate you to try to keep you from making a complaint.  [Cal Code of Regs 2695.7] An insurer cannot directly advise you against obtaining the services of an attorney.  It is against the law for your insurer to unreasonably deny a claim, which in turn forces you to have to sue to recover benefits owed.  [Cal Ins Code 790.03]

HOW TO GET COPIES OF LAWS AND REGULATIONS:

1) Request them from your insurance company.  They are required by law to give   them to you upon request, OR;

2) Read them online or print them out by going to www.insurance.ca.gov. To find them, go to the “Insurers” section, “Legal Information”, OR;

3) Go to www.uphelp.org.  Enter “Fair Claims” or “790.03”in search box.

4) Email info@uphelp.org if you can’t find them

REFERENCES: California Insurance Code, Section 790, 2051.5, 2071, California Code of Regulations, Title 26, Section 2695.

Timeline of Important Deadlines Under California Fair Claims Settlement Practices Regulations

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CALIFORNIA DEPARTMENT OF INSURANCE

HOMEOWNER CAN -> CALL 1-800-927-4357

Insurers Overview

Insurers Overview

The Insurance market in California is one of the largest in the world; valued at well over $123 billion. The California Department of Insurance regulates this industry to protect consumers and help maintain an economically healthy marketplace. This industry section provides access to producer licensing information, financial compliance, legal issues, market conduct and other information.

Over View of Insurer Programs and Resources

Producer License Status Inquiry

You may verify the status and discipline history of an agent, broker, adjuster, bail agent, business entity or another licensee by selecting Check a License. Input a license number or name to retrieve the license status and discipline history of that licensee. Select the available links on the license record to review additional license details.

Important Note: The Check a License online service requires the use of Microsoft Edge, Google Chrome, Safari or Firefox browser. Frequently use the Check a License online service? You may save the new Check a License link in your browser favorites.

Workers' Compensation Coverage Inquiry

Employer Workers' Compensation Coverage may be verified on the Workmans' Compensation Insurance Review Board (WCIRB) Website.

THIS WEBSITE LINK IS FOR ANY HOMEOWNER FOR ANY REASON OF DELAYS OR NOT PAYING REASONABLY TOWARDS THE CLAIM BY THE INSURANCE COMPANY visit -> https://cdiapps.insurance.ca.gov/CP/my-complaints/

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Independent estimates:

If the scope of loss, repair or replacement estimates prepared by the insurer seems unreasonably low, you have the right to get an independent reconstruction estimate (preferably from a forensic construction company with experience in estimating re-building, rather than new construction, as disaster-loss sites have their own set of issues, etc.) and submit it to the insurance company.  (The estimate may be reimbursed under your policy as a claim-related expense, so check.)  What happens next? Your insurer can 1) pay the difference between their estimate and yours; 2) at your request, recommend a contractor who can rebuild your home in the same materials and workmanship to return it to a “pre-loss condition” for the insurance company’s price, or 3) the insurer can “reasonably adjust” your contractor’s estimate.  [Cal Code of Regs 2695.9]

A Guide to Your Insurance Legal Rights in California California has more laws to protect insurance policyholders than any other state in the country. These laws tell insurers what they must, can and cannot do. There are laws made by judges and legislators in Sacramento called “case laws” and “statutes” or “code provisions”. There are laws called “regulations” that are written by the state Department of Insurance. But a law is a law regardless of fancy labels. There are many laws that tell companies and their representatives how they must behave when insured property is damaged and a claim is led. Many people, including claim adjusters are not aware of these laws. Some companies and adjusters routinely break these laws when handling claims – knowingly and unknowingly. This is particularly true when it comes to California’s “Fair Claim Settlement Practices Regulations. Many claim adjusters and even company executives have no idea that these regulations exist – let alone what they say. If you arm yourself with some basic knowledge about the laws that protect you, you can speed up your settlement and improve your odds of getting paid what you’re owed.  At the end of these tips, we tell you how to get free copies of the laws that protect homeowners in California. Your insurer was supposed to give them to you 15 days after you led your claim. (CA. Ins. Code sec. 790.034 (b)) Just in case they didn’t, here’s a review of the ones that may help you settle and get back home. There are many more laws than the ones we list here. The most important law to remember is that your insurance company has the legal duty to investigate, process, and pay your claim fully, promptly and in good faith and deal with you fairly at all times. For specifics on claim rules, deadlines and what you’re owed, you’ll want to know about California’s Fair Claim Handling Regulations. They spell out: •Deadlines for responding to letters and phone calls •Deadlines for your insurer to pay or deny •Deadlines for submitting paperwork to prove your loss •What information your insurance company must give you •What information you must give your insurance company “GOOD FAITH” 2/8 https://www.uphelp.org/library/resource/guide-your-insurance-legal-rights1/31/2020 A Guide to Your Insurance Legal Rights in California | United Policyholders You are legally entitled to be treated in “good faith” by your insurance company and its representatives at all times. This means your insurer must be considerate of your needs. It must communicate fully and honestly with you about the policy it sold you and about rights and duties relating to your claim.  In turn, you are legally obligated to be honest and to cooperate with reasonable requests for information relevant to your claim. Cal. Insurance Code sec. 790.03 is the main place to read these requirements. They’re also included in portions of Cal. Insurance Code sec. 2071. All representatives of your insurance company are legally required to tell you the truth. This includes in-person conversations and all communication by phone, letters, emails and all advertising and printed materials. This means they must be honest about what they sell you, what you’ve paid for and what you’re entitled to if you let a claim. An insurer “shall not cause to be issued, circulated or used, any statement that is known, or should be known, to be a misrepresentation” of the benefits or privileges of the policy or future dividends payable under the policy. [Cal Ins Code 780] No insurer shall misrepresent to a “claimant pertinent facts or insurance policy provisions relating to any coverages at issue”. [Cal Ins Code 790.03] No insurer shall discriminate in its claim settlement practices on the basis of a claimant’s age, race, gender, income, religion, language, sexual orientation, ancestry, national origin, physical disability or upon the territory of the property or person insured.  [Cal Code of Regs 2695.7] You are entitled to a “good faith” settlement.  Every insurer must attempt “in good faith to a actuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear”. An insurer cannot make an “unreasonably low” o er, that is, attempting to settle a claim “for less than the amount to which a reasonable person would have believed he or she was entitled by reference to written or printed advertising material accompanying or made part of the application”. [Cal Ins Code 790.02] Your insurer must conduct a reasonable investigation on its own and take into account all evidence you have submitted (such as your inventory lists, photographs, blueprints, independent scopes of loss, repair estimates, and appraisals on antiques, art or jewelry) in making the settlement o er. [Cal Code of Regulations 2695.7 and 2695.9] Depreciation/Actual Cash Value holdbacks must be reasonable and not excessive. PROMPT, HONEST & COMPLETE COMMUNICATIONS You are entitled to prompt, timely communications from your insurer.   The company (and all its representatives) must respond to your communications within “15 calendar days” with “a complete response based on the facts then known.”  Any question you ask, and any request you make must be responded to by the insurer within 15 calendar days. You must get in the habit of sending your insurer letters or emails, so there is a record of who said what and when.  That doesn’t mean you should stop talking to your adjuster.  If you request copies of your current policy and policy history, including previous policies, policy upgrades, notices of 3/8 https://www.uphelp.org/library/resource/guide-your-insurance-legal-rights1/31/2020 A Guide to Your Insurance Legal Rights in California | United Policyholders changes, etc.  (something UP highly recommends you request in writing), your insurer must respond to your request within 15 calendar days.  [Cal Code of Regs 2695] Your insurer must tell you about all deadlines that apply to your claim and the fact that there is a deadline for filing a lawsuit against them.  [Ins. Code 2071 and Cal Code of Regs 2695.7]  Once that deadline passes you lose the right to sue them, even if they have broken the law and cheated you. That deadline is called a “statute of limitations” and its purpose is to provide and keep things moving forward.  There is one deadline for suing an insurance agent and a different one for suing an insurance company, but to find out exactly what yours is – you’ll need to consult with an attorney before the one-year anniversary of your loss.  Why? Because in the state of California it’s tricky.  There’s something called “tolling”.  Your deadline is “tolled” (postponed) as long as your claim is still being processed but once they deny it – the clock starts again.  An insurer cannot mislead you about this but it’s a common source of confusion.  [Cal. Ins. Code 790.03] FAIR CLAIMS PROCESS Unless specified in your policy, you do not have to use the exact forms provided by your insurer to do your contents list.  A neat (hopefully, typed) list with replacement prices should work.  An insurer cannot ask for unreasonable “proofs of loss” such as secondary proofs.  For example, if you provide photographs or video of items in your home, you cannot then be compelled to provide receipts as well if they contain essentially the same information.  [Cal. Ins. Code 790.03] You have a right to receive a copy of every claim-related document in your le (see CDI bulletin (http://uphelp.org/sites/default/ les/publications/claimrelateddocumentsnotice.pdf)). An insurer shall “notify every claimant that they may obtain, upon request, copies of claim-related documents…” including construction estimates, photographs and the documentation backing up their estimates and “all other valuation”.  This means how your contents and construction estimates may have been depreciated.  [See “Requirements in case loss occurs” in Cal Ins Code 2071. (http://uphelp.org/sites/default/ les/publications/california_insurance_code_2071.pdf)]  The only thing you are not entitled to receive is attorney-client privileged communications and their attorney work. This means valuations, photographs, measurements, adjustor notes and reports, contents depreciation schedules, construction depreciation schedules, materials estimates, etc. are all part of your claims process, and you are entitled to receive complete copies of these so you can review them.

COOPERATIVE INVESTIGATION Keep in mind, the insurer has a responsibility to gather as much information as needed to ful ll their end of the claims process and you have a responsibility to cooperate in their investigation. You do not have a responsibility to cooperate with unreasonable requests for information or harassing tactics.  If you are asked to do a telephone interview, you are not compelled by California law to do so.  However, you are obligated to answer claim-related questions about your loss. 4/8 https://www.uphelp.org/library/resource/guide-your-insurance-legal-rights1/31/2020 A Guide to Your Insurance Legal Rights in California | United Policyholders Instead of doing a telephone interview, you may ask for written questions from the insurer’s investigator to be sent to you and to answer them in writing.  United Policyholders publishes separate tips on Examinations Under Oath. Visit http://www.uphelp.org (http://www.uphelp.org) and search for that term.

ADDITIONAL LIVING EXPENSES  In claims where the cause is declared a “disaster” by the State, insurers must offer at least 24 months worth of ALE (Additional Living Expenses) benefits, up to policy limits.  [Cal Ins. Code 2051] Your insurer must give you, (upon request) a list of items normally classified as reimbursable ALE expenses.  [Cal Ins. Code 2060] Typically ALE is paid via an advance to get you situated after the shock of the loss, then on an “as incurred” basis as you submit receipts and document expenses. ADJUSTING AND PAYING YOUR DWELLING CLAIM No lowballing: An insurer may not offer or force you to accept a settlement offer that is “unreasonably low”.  Your insurer owes you the amount that will restore the damaged property to no less than its condition before the loss, in a manner of good workmanship and industry standards, and the rebuilding costs are accurate and representative of the costs in the local market area up to policy limits, including all extended coverages, endorsements, etc.  An insurer cannot substitute cheaper materials or workmanship in estimating or having your home rebuilt.  For example, an adjuster cannot put down laminate counters if you had marble, or shave o ten feet from the length of a room, or put in for single-pane windows when you had double-pane.  [Cal Code of Regs 2695.9] Independent estimates: If the scope of loss, repair or replacement estimates prepared by the insurer seems unreasonably low, you have the right to get an independent reconstruction estimate (preferably from a forensic construction company with experience in estimating re-building, rather than new construction, as disaster-loss sites have their own set of issues, including water vaporization, etc.) and submit it to the insurance company.  (The estimate may be reimbursed under your policy as a claim-related expense, so check.)  What happens next? Your insurer can 1) pay the difference between their estimate and yours; 2) hire a contractor to rebuild your home in the same materials and workmanship to return it to a “pre-loss condition” or 3) the insurer can adjust the settlement amount to a more reasonable price.  [Cal Code of Regs 2695.9] Settling on the replacement cost of your original home and using those funds to buy elsewhere: CA. Ins. Code 2051.5(c) allows a total loss claimant to use replacement cost funds to buy elsewhere instead of rebuilding.  Because it is a new law, your adjuster/insurer may not be aware of it and there may be disagreements and confusion.  If you want to use this option we strongly recommend that you get an independent scope of loss and estimates to replace the home you had – even 5/8 https://www.uphelp.org/library/resource/guide-your-insurance-legal-rights1/31/2020 A Guide to Your Insurance Legal Rights in California | United Policyholders though you don’t want to replace it at the old location, then use that information to reach an agreement on how much insurance money you can use to buy a replacement home instead of rebuilding. New construction and disaster re-construction costs in many areas are higher than the purchase price of another, comparable home in the area.  So, you may want to seriously weigh whether you want to take a settlement that gives you enough to purchase another existing house, or a lump sum equal to rebuilding your home. CONTRACTORS You cannot be compelled by an insurer to have your property repaired or rebuilt by a specific individual or entity.  Only if you expressly request referrals can an insurer provide them and the insurer must inform you in writing that you have the right to choose a repair individual or entity.  If you choose the one recommended by the insurer, the individual or entity must restore your damaged property back to its pre-loss condition in a manner of good workmanship, acceptable trade standards and at no additional cost to the claimant than stated in the policy or allowed by California law.  [Cal Code of Regs 2695.9] FAIR DEPRECIATION An insurer cannot reduce your benefits by depreciating things that would normally not be replaced over the useful life of the property such as framing, the foundation and the expense of labor to repair your property.  You have the right to know how your insurer calculated depreciation was calculated and how they calculated their settlement o er [Cal Ins Code 2071 and Cal Code of Regs 2695.9] RULE OF THUMB If your insurer refuses to make a payment you believe you are entitled to, ask them to show you where in your policy it states you are not entitled to it.  Also, if your insurer quotes some strange reason for depreciation (such as the California community fence “rule”), ask them to provide you with a written copy of the law.  Any type of depreciation or plain rejection of a part of your claim must be backed up by the insurer with verifiable dollar-valued documentation, not just because they said so.  Ask for that documentation. Sometimes the law “trumps” (overrides) your insurance company.  Sometimes policy provisions or claim rules they are trying to impose on you are illegal and cannot be enforced by them.  So don’t take “no” for an answer unless you’re sure they’re right. 6/8 https://www.uphelp.org/library/resource/guide-your-insurance-legal-rights1/31/2020 A Guide to Your Insurance Legal Rights in California | United Policyholders EXAMINATION UNDER OATH If you are asked to provide an “Examination Under Oath”, an insurer may only ask you questions that are “relevant” to processing your claim.  You are entitled to a copy of the transcript and tape (if recorded) and have the right to clarify or rectify the answers you gave under oath.  You may also ask for the questions they are going to ask in advance, however your insurance company is not legally obligated to give them to you. [Cal Ins. Code 2071] COMPLAINTS, ATTORNEYS & LITIGATION An insurer cannot retaliate against you for making complaint to the California Department of Insurance or withhold payments until the complaint is withdrawn or threaten or intimidate you to keep you from making a complaint.  [Cal Code of Regs 2695.7] An insurer cannot directly advise you against obtaining the services of an attorney.  It is against the law for your insurer to unreasonably deny a claim, which in turn forces you to have to sue to recover the benefits owed.  [Cal Ins Code 790.03]

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Insurance Regulations Prohibit an Insurer From Just Standing By Its Repair Estimate When An Insured’s Estimate Demonstrates the Cost to Repair Is More – Another California Practice Tip

Sep 21, 2019 By Victor Jacobellis

California

Tags: Consumer Protection, Regulation

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In California, the moment an insured obtains a repair estimate that exceeds the insurer’s estimate, the insurer must either pay the difference or adjust its original estimate. This rule is set forth in the Fair Claims Settlement Practices Act, 10 Cal. Code Regs. § 2695.9(d). Generally, whenever anyone makes an insurance claim, the insurance company will create a scope of work to repair the damaged property and an estimate of what that cost to repair is. The insurer’s estimate does not atomically mean that is the amount of the claim. An insured has the right to get his or her own estimate and the insurer is required to consider that estimate.

The Fair Claims Settlement Practices Act states:

If the claimant subsequently contends, based upon a written estimate which he or she obtains, that necessary repairs will exceed the written estimate prepared by or for the insurer, the insurer shall:

(1) pay the difference between its written estimate and a higher estimate obtained by the claimant; or,

(2) if requested by the claimant, promptly provide the claimant with the name of at least one repair individual or entity that will make the repairs for the amount of the written estimate. The insurer shall cause the damaged property to be restored to no less than its condition prior to the loss and which will allow for repairs in a manner which meets accepted trade standards for good and workmanlike construction at no additional cost to the claimant other than as stated in the policy or as otherwise allowed by these regulations; or,

(3) reasonably adjust any written estimates prepared by the repair individual or entity of the insured’s choice and provide a copy of the adjusted estimate to the claimant.

The insurer has three options: (1) pay the insured’s estimate; (2) negotiate with the insured to rectify the insurer’s and the insured’s estimate or (3) provide a vendor that will make repairs for the amount of the insurer’s estimate. It is important to note that if the insurer recommends a vendor to perform the repairs, it essentially must guaranty that vendor’s work. Thus, the insurance company will undertake an obligation above and beyond its original policy duties.

Whenever an insurer prepares its own estimate there are additional rules imposed on the insurer:

• The insurer shall supply the claimant with a copy of each document upon which the settlement is based.

• The estimate prepared by or for the insurer shall be in accordance with applicable policy provisions, of an amount which will restore the damaged property to no less than its condition prior to the loss

• The estimate must allow for repairs to be made in a manner which meets accepted trade standards for good and workmanlike construction.

It is important to remember all these insurer’s obligations when adjusting a clam. If an insurer does not comply with any of these duties, it should immediately be brought to the insurer’s attention. When bringing a Fair Claims Settlement Practices Act violation to an insurer’s attention, always make sure to state the regulation number. This immediately puts the insurer on notice of their bad faith behavior.

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