February 25, 2025 • 20 mins
This week on the Justice Team Podcast, Bob is joined by the Insurance Avenger: Sara McClain. Sara shares her journey into insurance law and offers valuable advice on handling insurance claims relating to the Altadena and Palisades fires, including first-party and third-party claims. Sarah also highlights the importance of understanding your insurance policy and offers tips on maximizing your coverage.
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Episode Transcript
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Bob (00:00):
Wait, what?
Welcome to this episode of the justiceteam podcast on the justice team
network, where we give practicalhow to's for lawyers and, you know,
everyday folk to be able to make themunderstand the law and how it works.
And today we are very honored tohave on the insurance Avenger.
That's actually her Instagram handle,the insurance Avenger, Sarah McLean.
Sara (00:21):
Good morning.
Bob (00:23):
So Sarah is one person that I lean on for Advice on insurance
policies and things like this becauseit's a very specialized area of law
Sara (00:33):
Yes, or boring as some people like to describe it
Bob (00:36):
All right, give some folks uh, just your background and how you
got to love for you know, readingthese policies and analyzing them
Sara (00:43):
Well, I don't think it'll come as any surprise that I didn't grow
up wanting to be an insurance lawyerum, it was something that I fell into
after law school, um a Graduated in2009, best time to be looking for a
job as a new lawyer, and a firm thatwas hiring, uh, was hiring for a
particular case that was going to trial.
(01:04):
Uh, it was a rescission case, um,involving insurance application
with misrepresentations.
And I was hired exclusively for that case.
And, um, I got an 1800 page claimfile and put it in cron order and
started to, to look into this case.
And it was a, a woman who hadher, it was her third house fire.
(01:27):
Um, and it was, it happened within a shortperiod after the policy was applied for.
And, um, so it became a lot morefascinating than about, you know,
misrepresentations and reliance andall that other stuff that I really
barely passed in law school anyways.
Um, and I just really enjoyed it.
And it was something I was reallygood at and it's, it made sense to me.
(01:49):
And so, um, I just went with it
Bob (01:52):
because, you know, I've done enough of those third party, we call them
third party bad faith cases to realizethat insurance companies will find any
way to try to rescind a policy, denycoverage, all these types of exclusions.
And if you don't know how to fightback, it's, that kind of sucks.
So can you give our, our listenersand viewers an understanding of
the difference between like what weconsider a first party claim against
(02:12):
insurance and a third party claim?
Sara (02:14):
Yeah, of course.
So a first party claim is a claim thatyou make under your own insurance policy.
Um, and that can be whether it'shomeowners policy with property
damage, um, under your, obviouslyyour auto policy, if you've got
comprehensive things like that.
Um, and then a third party, uh, claimis if you were making a claim against
(02:34):
someone else's policy and most typicallywe see that with the liability coverage.
Bob (02:39):
Yeah.
And I know you're doing a lotof work for the fire victims
here in Southern California.
So I'm going to usethat as a use case here.
So you know, Altadena, Pasadena, SierraMadre areas, the third party, the
person responsible is Edison, right?
I want to concentrate on thefirst party stuff because, you
know, We're doing the best we can.
They're not like superexperienced first party coverage
(03:02):
lawyers to give general advice.
But again, we'd like to lean on you.
So can you kind of walk us through yourprocess whenever people come to you?
Cause we have different buckets of folks.
First this talk about peoplethat do have insurance on their
properties that burn down.
What are the steps that you take?
Sara (03:20):
Okay.
So we're primarily, we'redealing with homeowners.
I mean, you know, a lot of discussionhas been on the homeowners.
Um, There's also business owners,obviously, um, business owners who lost
their, their property, their business.
Um, but when it comes to, to homeowners,number one is I find out who's the
insurance company because then Iknow what I'm dealing with and sort
(03:42):
of what the, what the playing fieldlooks like, um, and what to expect
and, and how to prepare for that.
And then I want to look obviously attheir policy, mainly their declarations.
Um, so that I understand what theircoverages are and what their limits are.
Um, and obviously, uh, I know a lotof people have been talking about
(04:02):
under insurance, um, and that isunfortunately, uh, a real issue.
Bob (04:06):
Nobody has more insurance for the value of their home.
We're seeing anyway.
Right?
Sara (04:11):
Right.
Bob (04:11):
Nobody's overinsured.
Yeah.
So you have, so on the declaration page,homeowners, what should they want to know?
What coverages do I have?
What can I recoup?
What are the things that you'reseeing on these policies?
Sara (04:22):
Um, well, I'm seeing people realize that I obviously we've
got like the dwelling coverage.
Your standards homeowners policy is goingto have dwelling coverage, which is going
to cover the house other structures,which is going to cover basically
anything that's affixed to the land.
That is not your house.
So your garage or pool.
Uh, fences, sheds, things like that.
Bob (04:42):
Your garden, all these things.
That's other
structures.
Sara (04:47):
Not with the garden quite, so there's see, there's a separate
coverage for that for trees,um, shrubs and landscaping.
So, it all really depends on whatthe policy, um, you know, what
the what the policy language is.
Um, and so, but you want to look forthose coverages on the declarations page.
It won't have any detail about thecoverage, but at least you know that okay.
(05:10):
I've got dwelling for this much I'vegot other structures for this much
personal property and then either theysome policies call it loss of use others
call it Additional living expenses.
Bob (05:20):
So yes, so whenever the because people ask like what are my Can I go rent?
What coverages do I have?
So they're looking for loss of use.
So what are the, what are the terms there?
Cause there's different policies.
Just so everybody's listening insurance,label things different ways per company.
So what should we, we'd be lookingat to see if there's rental.
Sara (05:38):
Okay, so rental coverage actually can be one of the trickier
coverages, um, because you don't ownthe building structure, but you still
have an insurable interest in certaincomponents of the building because
Bob (05:53):
that's the text.
I mean, if on your insurance policy,if people say you own your home
and there's a provision on it to.
I got to go rent somewhere nowbecause my house burned down.
Okay.
What's that coverage called?
Sara (06:06):
Okay, so that's additional living expenses or loss of use.
Um, under fair plan policies, it'scalled fair rental value because that
coverage is a little bit different.
Um, but the standard homeowner's policyis going to have, um, loss of use and
the overall coverage, uh, insuringprovision allows for, um, reimbursement
for any expenses that are incurred.
(06:28):
Um, incurred is an important word.
Okay.
Um, any expenses that are incurred inorder for a insured to, uh, maintain
their normal standard of living.
Bob (06:38):
Yeah.
So what's, when they see that number, it'susually a gross number, like 200, 000.
Sara (06:43):
Yeah.
It's usually a lot of the coveragesother than dwelling are a percentage
of your dwelling coverage.
Um, so a lot of people don't knowthat they need to look at that
number and, and adjust it and see,you know, what would it take, you
know, how much would I spend in rent?
Um, if I've got unique animals thatI can't keep with me in a rental, um,
the boarding cost for that and thingslike that, it's, it's something that a
(07:06):
lot of people don't really think about.
Um, but that limit that's on yourpolicy, if you've got a dollar limit,
um, that is unfortunately going tobe the cap of what the insurance
companies are required to pay.
Bob (07:18):
It is that, I mean, could you rent one place for one month for 200, 000 if
that's the cap or, I mean, What's the play
Sara (07:25):
so that so there's a difference between what the policy covers and allows
for versus what is going to work foran individual insured in the long run.
Um, you know, there are people who,uh, their homes were 5, square feet.
Um, but they only have say 000in, uh, loss of use coverage.
(07:47):
And if you're looking at an 18 monthsto 24 month rebuild period, um,
you're going to run out of that money.
If you Find if you insist on havinga rental that is the same as your
as your prior home Um, and so peopleare just being practical about that
and also being realistic about thehousing market and and really what's
(08:09):
available so You got to kind of
Bob (08:11):
take that number and see if you can stretch it out 18 months,
24 months for the rebuild process.
Sara (08:17):
It's like going back to college and having to do that budgeting.
That is so difficult.
Bob (08:22):
Most everyone's going to be underinsured with the housing
market here in Southern California.
So.
How do they make up the difference?
Sara (08:30):
Um, well, it just depends on where, you know, what their circumstances are,
what resources they have, um, especiallywith a lot of generational families.
Um, a lot of them have beenstaying with, with each other.
Um, but there are a lot of otherresources out there for assistance.
Um, and I, I have to say, youknow, I was born and raised in LA.
(08:52):
I know I'm a, I'm the SanSan Diego Padres fan now.
Uh, yeah, we see
Bob (08:56):
the shirt.
Yeah.
Very we'll.
Let, we'll let thecomments talk about that.
I, yeah.
. Sara: That's all right.
Um, fryer faithful here.
Uh, but.
You know, I am, I am overwhelmed by theoutpouring of support and commitment
by so many community members and somany organizations and it really is,
um, very encouraging for, for, youknow, the community in the long run.
(09:18):
But there is FEMA assistance,there is, um, you know, the SBA,
the Small Business Administration.
Will FEMA help
if you're underinsured?
Sara (09:26):
So, yes.
But the question that I still am wonderingis when will that help come because they
want you to exhaust All your your funding.
So
Bob (09:37):
let's use the situation.
We have a lot of generational familiesin Altadena that they lose their home
They they will then stay with a familymember but say that they have this
rental coverage on their policy Canthey have their family member charge
them rent so that the insurance pays?
Like what, like what dowe do in this situation?
Sara (09:58):
So it's interesting that you bring that up.
And my number one piece of advice is justbe very careful about how you're handling
that part of the claim and how you aretransacting things and documenting it.
Um, just because it's, it's kindof a, excuse me, Um, it's a little
bit of a confusing coverage.
(10:19):
It really is one of those, itdepends kind of things, um, because
it's whatever you need to maintainyour normal standard of living.
And you and I, you know, one person to thenext has a different standard of living.
Um, and even though you're stayingwith a family member and you would
otherwise have to pay rent if theyweren't letting you stay for free.
(10:41):
Unless you are actually handing thatmoney over and incurring an obligation.
And that's why I mentioned beforeabout that being really important.
So get a
Bob (10:50):
rental contract and really go through the process.
I mean, I'm of the sense if you hadinsurance and you're paying for it,
exhaust every single penny that you can.
Oh, that's the way I feel about it.
Sara (10:59):
Policy limits.
Bob (11:00):
Policy limits.
So a homeowner comes and Say their houseburnt down and they're under, they're
obviously don't have enough coverage.
What steps do they do next?
Sara (11:09):
So, well, first is to make the claim with the insurance
company, um, and get them to payout everything, um, that they owe.
Bob (11:16):
And you just write a letter and say, pay my policy limits, total
burn, here's the photos, pay it.
Sara (11:21):
If anyone is able to do that, that, that easily, I'd love to know.
Bob (11:26):
Well, they give you 30 percent upfront, right?
They say, here's 30 percentof the policy upfront,
Sara (11:31):
right?
Bob (11:31):
So send an adjuster over to.
Take a photo to make sureeverything's damaged, right?
Sara (11:35):
So at the core of every insurance claim is the insurance company's duty
to investigate and that Scope of ofduty it applies no matter what the
circumstances are And so what they haveto do to investigate obviously depends
on the circumstances of the claim But inthis instance, when it is obvious that
(11:57):
the homeowner is underinsured, and it isa total loss, and it is going to be 18
months to, to rebuild, you, you know, theyhave to have some kind of paper support,
they call it supports in the file, right?
So that they're not just likethrowing money out at, you
know, whoever they feel like it.
but they need to relax thestandard and the rigidness of
(12:19):
their, their standards for what issufficient to justify that payment.
Bob (12:23):
Yeah.
And there's, there's theother part of the coverage.
So we have dwelling, we have rentaluse other structures, and then we
have other personal property, right?
That's a big one.
OPP OPP, you know, menaughty by nature stretch.
Um, so OPP, your personal property.
coverage for that, but that's, that'sthe one that's the gray area, right?
(12:44):
Cause sometimes they're like, well,did you really have like some out of.
In your home,
Sara (12:49):
right?
Yeah.
So if you have a water damage claim,obviously demonstrating your personal
property losses are is relatively easybecause everything's still intact.
Fire is very difficult.
Um, every single homeownerspolicy has a requirement that
you submit an itemized inventory.
With the most, some of the mostridiculous details that nobody can
(13:09):
remember, like, you know, how muchyou paid for that sofa that you bought
in 1996 or, or something like that.
Um, it's, but it is a standardpolicy, and it is required in order
to, you know, substantiate the amountof losses, but insurance companies
are supposed to be reasonable.
Right.
Because when they are not reasonable,then they get sued for bad faith.
(13:30):
But
Bob (13:31):
this, I think this is the, this is the more gray where I think insurance
companies could trip up because ifthey really, it's like, I mean, come
on, people's houses burned down.
You have X amount of coverage.
Like obviously you could take alook at people's social media and be
like, yeah, they're, they're home.
The contents of their home and personalproperty is very likely over that.
So let's not mess around,
Sara (13:49):
right?
And that's really what theyshould be doing, especially in
the total loss circumstances.
Um, unfortunately right now they'renot, um, that being said, uh, there
was a bill recently introduced tothe state legislatures, um, that
would mandate the insurance companiesto, uh, waive the requirement that
you submit the itemized inventory.
(14:10):
Uh, in instances of total lossand shout out to my former high
school, uh, classmate and ASBpresident, Ben Allen, who is now
a state, uh, a state legislature.
And he, uh, he proposed that bill.
So
Bob (14:24):
Ben Allen's been a huge ally for consumers and victims.
Um, I mean, he's been, I've nevermet him, but I could see the
bills that he writes and support.
So Ben Allen, if you ever want to comeon the show, you're a huge advocate
for everything that we believe in.
So we'd love to talk to you
Sara (14:36):
and we'll have a San Juan high reunion.
Bob (14:38):
There we go.
So, um, We went through you file a claim.
This is some of the things we do.
Let's talk about another bucket offolks renters Uh, I get a lot of
questions about renters, uh businessrenters and homeowner renters.
What are their rights,
Sara (14:53):
right?
and so I'm, one of those people thatI I know What what toys I have to
play with in my sandbox and so inthat instance, I you know I talked to
landlord tenant attorneys who are moreFamiliar with the nuances of landlord
rights and things like that Um, if arenter, the issue that I'm seeing with
renters is, is that they get the stuffhandled for what they have coverage for.
(15:17):
So their personal property.
Their additional living expenses,
Bob (15:21):
but under which policy?
Sara (15:22):
So there there's a, so there's a renter's insurance has got, um,
there's, there's a renter's insurancepolicy and it basically covers
everything except the structure.
Bob (15:33):
So that's if they have a renter's.
Policy
Sara (15:35):
correct.
And it depends.
I think you can get structures coverageon a renter's policy just because of
what is defined as part of the building.
You know, if you bought a, youknow, if you made improvements to
your, to your, uh, apartment oryour condo, you know, that's part of
the realty, but that's still yours.
And so that should be covered underbuilding, but they are having,
(15:59):
what I'm seeing with renters isthey're having issues with the
landlords not doing the necessary.
repairs, cleaning, takingthe situation seriously with
respect to, to the building.
And in those instances, you know, we havethe implied warranty of habitability.
Bob (16:16):
So that's from a landlord, the owner of the property,
the employer, implied warrant.
It means you got to makegood on your property, right?
If you're renting to somebody and it'simplied that you'll do in good faith.
So you have landlord.
So I get this question alot, like landlord won't let
me back onto the premises.
Even to sift through my ashes.
My landlord won't let me back inor not Rehabbing the building yet
(16:38):
if it wasn't totally burnt downWhat do we do in these situations?
Sara (16:42):
Read your lease read your rental agreement go to the contract those
there are laws that apply to landlordtenant relationships But then there's
also the contract and that's whatI say with insurance claims too is
what it's what does the policy say?
Bob (16:54):
The
policy is a contract betweenyou and your insurance company.
Sara (16:57):
Yes
Bob (16:58):
Renter, look at your insurance between you and the landlord,
whether you're a business or arenter of your personal home.
Sara (17:06):
Yeah, no, I mean and especially too because some language, you know,
the language in those leases differsum, but at the you know, and often um,
There is a provision that if the propertybecomes uninhabitable that the tenant
is allowed to to break the lease Andthen can you know go free and clear?
Um the the rules regarding if somebodydoes do that the rules regarding regarding
(17:29):
um security deposits Obviously stillapply so it's and I will say with the
landlord tenant issues There are a lot oforganizations and agencies that specialize
in helping tenants and advising them oftheir rights so I definitely encourage
anybody that's got issues with theirlandlords to to reach out because Um, I
(17:49):
think that is definitely a particularlyvulnerable vulnerable population A segment
of the population that's being affected.
Bob (17:56):
So how about this situation this last topic just Homeowner property
owner has a renter It burns down.
Homeowner has a policy for rentalvalue, loss of rental value.
Now they weren't livingthere, they were renting it.
Can they use that, that coverage?
(18:17):
It's almost like a lossof income for the rental.
Sara (18:19):
What does the policy say?
Bob (18:20):
Uh, the typical policy just says like, So,
Sara (18:24):
so, Because they weren't living there.
Right, and so a typical policy recognizesthat, that that is a common occurrence.
And so they'll have, that's the true lossof use or fair rental value coverage.
Um, so if you've got an existingtenant and there's a lease and it
demonstrates how much you would havereceived in rent, you can submit
that to your insurance company.
Okay.
Um, and they would be requiredto reimburse you for that.
(18:47):
That being said, before, I, I, again,consult your policy before you, you
take that step because it, therecould be gray areas or it could be
sort of, you know, you didn't realizeit didn't have that coverage, um, so
you just always want to be, you know,very careful and do your due diligence
and, and every step of the claim.
Bob (19:07):
Yeah.
And that's where you get that number.
You divide it by however many monthsand see if you have enough time
to rebuild during that process.
Okay.
Thanks.
and still be able to recruityour fair rental value.
Sara (19:17):
Right.
Bob (19:17):
Great.
Um, so again, how dopeople reach you, Sarah?
Sara (19:20):
Um, they can, uh, they can, uh, they can send out the bat signal right now.
Um, they can't, I I'm on Instagramat the insurance Avenger.
Um, I can be reached at Sarahat the insurance Avenger.
com.
Um, and I, if people really wantto find me, I'm sure they can get
ahold of me one way or another.
Bob (19:39):
Yeah.
And you know, Sarah's a newmember coming to justice HQ.
We appreciate your insight and buildingthe community and teaching everybody
about insurance and stuff like this.
Cause I learned so much on this episode.
And you know, sticking withthe Avengers, I think you'd
love in a lot of our Locations.
Like we have a group in the orange Countyone, and we have a giant Hulk that's
actually down in the basement here.
So there's a lot of likeAvenger Jason stuff going on.
Sara (20:01):
Oh, totally.
No, it's a lifestyle.
Bob (20:02):
It's a lifestyle.
Well, thank you for, thankyou for fighting for folks.
Like Sarah's been like literallyboots on the ground, helping
people, you know, whether in achurch or like in a parking lot.
Um, giving people advice
Sara (20:14):
outside of the back of my, my minivan.
Bob (20:16):
Yeah.
Sara (20:17):
Shout out to the minivan mafia.
Bob (20:18):
Yeah.
Many vans are awesome.
You can put a lot of stuff in there.
Sara (20:20):
Oh, don't get me started.
I could do a whole episode on that.
Bob (20:24):
All right.
Thank you for listening to thisepisode of the justice team podcast
on the justice team network.
You can go to the justice team network.
com or you can watch on YouTube oranywhere it is, but please reach out
to Sarah with any insurance questions.
Thank you all very much.
Sara (20:35):
so much.
Wait, what?
Welcome to this episode of the justiceteam podcast on the justice team
network, where we give practicalhow to's for lawyers and, you know,
everyday folk to be able to make themunderstand the law and how it works.
And today we are very honored tohave on the insurance Avenger.
That's actually her Instagram handle,the insurance Avenger, Sarah McLean.
Sara (00:21):
Good morning.
Bob (00:23):
So Sarah is one person that I lean on for Advice on insurance
policies and things like this becauseit's a very specialized area of law
Sara (00:33):
Yes, or boring as some people like to describe it
Bob (00:36):
All right, give some folks uh, just your background and how you
got to love for you know, readingthese policies and analyzing them
Sara (00:43):
Well, I don't think it'll come as any surprise that I didn't grow
up wanting to be an insurance lawyerum, it was something that I fell into
after law school, um a Graduated in2009, best time to be looking for a
job as a new lawyer, and a firm thatwas hiring, uh, was hiring for a
particular case that was going to trial.
(01:04):
Uh, it was a rescission case, um,involving insurance application
with misrepresentations.
And I was hired exclusively for that case.
And, um, I got an 1800 page claimfile and put it in cron order and
started to, to look into this case.
And it was a, a woman who hadher, it was her third house fire.
(01:27):
Um, and it was, it happened within a shortperiod after the policy was applied for.
And, um, so it became a lot morefascinating than about, you know,
misrepresentations and reliance andall that other stuff that I really
barely passed in law school anyways.
Um, and I just really enjoyed it.
And it was something I was reallygood at and it's, it made sense to me.
(01:49):
And so, um, I just went with it
Bob (01:52):
because, you know, I've done enough of those third party, we call them
third party bad faith cases to realizethat insurance companies will find any
way to try to rescind a policy, denycoverage, all these types of exclusions.
And if you don't know how to fightback, it's, that kind of sucks.
So can you give our, our listenersand viewers an understanding of
the difference between like what weconsider a first party claim against
(02:12):
insurance and a third party claim?
Sara (02:14):
Yeah, of course.
So a first party claim is a claim thatyou make under your own insurance policy.
Um, and that can be whether it'shomeowners policy with property
damage, um, under your, obviouslyyour auto policy, if you've got
comprehensive things like that.
Um, and then a third party, uh, claimis if you were making a claim against
(02:34):
someone else's policy and most typicallywe see that with the liability coverage.
Bob (02:39):
Yeah.
And I know you're doing a lotof work for the fire victims
here in Southern California.
So I'm going to usethat as a use case here.
So you know, Altadena, Pasadena, SierraMadre areas, the third party, the
person responsible is Edison, right?
I want to concentrate on thefirst party stuff because, you
know, We're doing the best we can.
They're not like superexperienced first party coverage
(03:02):
lawyers to give general advice.
But again, we'd like to lean on you.
So can you kind of walk us through yourprocess whenever people come to you?
Cause we have different buckets of folks.
First this talk about peoplethat do have insurance on their
properties that burn down.
What are the steps that you take?
Sara (03:20):
Okay.
So we're primarily, we'redealing with homeowners.
I mean, you know, a lot of discussionhas been on the homeowners.
Um, There's also business owners,obviously, um, business owners who lost
their, their property, their business.
Um, but when it comes to, to homeowners,number one is I find out who's the
insurance company because then Iknow what I'm dealing with and sort
(03:42):
of what the, what the playing fieldlooks like, um, and what to expect
and, and how to prepare for that.
And then I want to look obviously attheir policy, mainly their declarations.
Um, so that I understand what theircoverages are and what their limits are.
Um, and obviously, uh, I know a lotof people have been talking about
(04:02):
under insurance, um, and that isunfortunately, uh, a real issue.
Bob (04:06):
Nobody has more insurance for the value of their home.
We're seeing anyway.
Right?
Sara (04:11):
Right.
Bob (04:11):
Nobody's overinsured.
Yeah.
So you have, so on the declaration page,homeowners, what should they want to know?
What coverages do I have?
What can I recoup?
What are the things that you'reseeing on these policies?
Sara (04:22):
Um, well, I'm seeing people realize that I obviously we've
got like the dwelling coverage.
Your standards homeowners policy is goingto have dwelling coverage, which is going
to cover the house other structures,which is going to cover basically
anything that's affixed to the land.
That is not your house.
So your garage or pool.
Uh, fences, sheds, things like that.
Bob (04:42):
Your garden, all these things.
That's other
structures.
Sara (04:47):
Not with the garden quite, so there's see, there's a separate
coverage for that for trees,um, shrubs and landscaping.
So, it all really depends on whatthe policy, um, you know, what
the what the policy language is.
Um, and so, but you want to look forthose coverages on the declarations page.
It won't have any detail about thecoverage, but at least you know that okay.
(05:10):
I've got dwelling for this much I'vegot other structures for this much
personal property and then either theysome policies call it loss of use others
call it Additional living expenses.
Bob (05:20):
So yes, so whenever the because people ask like what are my Can I go rent?
What coverages do I have?
So they're looking for loss of use.
So what are the, what are the terms there?
Cause there's different policies.
Just so everybody's listening insurance,label things different ways per company.
So what should we, we'd be lookingat to see if there's rental.
Sara (05:38):
Okay, so rental coverage actually can be one of the trickier
coverages, um, because you don't ownthe building structure, but you still
have an insurable interest in certaincomponents of the building because
Bob (05:53):
that's the text.
I mean, if on your insurance policy,if people say you own your home
and there's a provision on it to.
I got to go rent somewhere nowbecause my house burned down.
Okay.
What's that coverage called?
Sara (06:06):
Okay, so that's additional living expenses or loss of use.
Um, under fair plan policies, it'scalled fair rental value because that
coverage is a little bit different.
Um, but the standard homeowner's policyis going to have, um, loss of use and
the overall coverage, uh, insuringprovision allows for, um, reimbursement
for any expenses that are incurred.
(06:28):
Um, incurred is an important word.
Okay.
Um, any expenses that are incurred inorder for a insured to, uh, maintain
their normal standard of living.
Bob (06:38):
Yeah.
So what's, when they see that number, it'susually a gross number, like 200, 000.
Sara (06:43):
Yeah.
It's usually a lot of the coveragesother than dwelling are a percentage
of your dwelling coverage.
Um, so a lot of people don't knowthat they need to look at that
number and, and adjust it and see,you know, what would it take, you
know, how much would I spend in rent?
Um, if I've got unique animals thatI can't keep with me in a rental, um,
the boarding cost for that and thingslike that, it's, it's something that a
(07:06):
lot of people don't really think about.
Um, but that limit that's on yourpolicy, if you've got a dollar limit,
um, that is unfortunately going tobe the cap of what the insurance
companies are required to pay.
Bob (07:18):
It is that, I mean, could you rent one place for one month for 200, 000 if
that's the cap or, I mean, What's the play
Sara (07:25):
so that so there's a difference between what the policy covers and allows
for versus what is going to work foran individual insured in the long run.
Um, you know, there are people who,uh, their homes were 5, square feet.
Um, but they only have say 000in, uh, loss of use coverage.
(07:47):
And if you're looking at an 18 monthsto 24 month rebuild period, um,
you're going to run out of that money.
If you Find if you insist on havinga rental that is the same as your
as your prior home Um, and so peopleare just being practical about that
and also being realistic about thehousing market and and really what's
(08:09):
available so You got to kind of
Bob (08:11):
take that number and see if you can stretch it out 18 months,
24 months for the rebuild process.
Sara (08:17):
It's like going back to college and having to do that budgeting.
That is so difficult.
Bob (08:22):
Most everyone's going to be underinsured with the housing
market here in Southern California.
So.
How do they make up the difference?
Sara (08:30):
Um, well, it just depends on where, you know, what their circumstances are,
what resources they have, um, especiallywith a lot of generational families.
Um, a lot of them have beenstaying with, with each other.
Um, but there are a lot of otherresources out there for assistance.
Um, and I, I have to say, youknow, I was born and raised in LA.
(08:52):
I know I'm a, I'm the SanSan Diego Padres fan now.
Uh, yeah, we see
Bob (08:56):
the shirt.
Yeah.
Very we'll.
Let, we'll let thecomments talk about that.
I, yeah.
. Sara: That's all right.
Um, fryer faithful here.
Uh, but.
You know, I am, I am overwhelmed by theoutpouring of support and commitment
by so many community members and somany organizations and it really is,
um, very encouraging for, for, youknow, the community in the long run.
(09:18):
But there is FEMA assistance,there is, um, you know, the SBA,
the Small Business Administration.
Will FEMA help
if you're underinsured?
Sara (09:26):
So, yes.
But the question that I still am wonderingis when will that help come because they
want you to exhaust All your your funding.
So
Bob (09:37):
let's use the situation.
We have a lot of generational familiesin Altadena that they lose their home
They they will then stay with a familymember but say that they have this
rental coverage on their policy Canthey have their family member charge
them rent so that the insurance pays?
Like what, like what dowe do in this situation?
Sara (09:58):
So it's interesting that you bring that up.
And my number one piece of advice is justbe very careful about how you're handling
that part of the claim and how you aretransacting things and documenting it.
Um, just because it's, it's kindof a, excuse me, Um, it's a little
bit of a confusing coverage.
(10:19):
It really is one of those, itdepends kind of things, um, because
it's whatever you need to maintainyour normal standard of living.
And you and I, you know, one person to thenext has a different standard of living.
Um, and even though you're stayingwith a family member and you would
otherwise have to pay rent if theyweren't letting you stay for free.
(10:41):
Unless you are actually handing thatmoney over and incurring an obligation.
And that's why I mentioned beforeabout that being really important.
So get a
Bob (10:50):
rental contract and really go through the process.
I mean, I'm of the sense if you hadinsurance and you're paying for it,
exhaust every single penny that you can.
Oh, that's the way I feel about it.
Sara (10:59):
Policy limits.
Bob (11:00):
Policy limits.
So a homeowner comes and Say their houseburnt down and they're under, they're
obviously don't have enough coverage.
What steps do they do next?
Sara (11:09):
So, well, first is to make the claim with the insurance
company, um, and get them to payout everything, um, that they owe.
Bob (11:16):
And you just write a letter and say, pay my policy limits, total
burn, here's the photos, pay it.
Sara (11:21):
If anyone is able to do that, that, that easily, I'd love to know.
Bob (11:26):
Well, they give you 30 percent upfront, right?
They say, here's 30 percentof the policy upfront,
Sara (11:31):
right?
Bob (11:31):
So send an adjuster over to.
Take a photo to make sureeverything's damaged, right?
Sara (11:35):
So at the core of every insurance claim is the insurance company's duty
to investigate and that Scope of ofduty it applies no matter what the
circumstances are And so what they haveto do to investigate obviously depends
on the circumstances of the claim But inthis instance, when it is obvious that
(11:57):
the homeowner is underinsured, and it isa total loss, and it is going to be 18
months to, to rebuild, you, you know, theyhave to have some kind of paper support,
they call it supports in the file, right?
So that they're not just likethrowing money out at, you
know, whoever they feel like it.
but they need to relax thestandard and the rigidness of
(12:19):
their, their standards for what issufficient to justify that payment.
Bob (12:23):
Yeah.
And there's, there's theother part of the coverage.
So we have dwelling, we have rentaluse other structures, and then we
have other personal property, right?
That's a big one.
OPP OPP, you know, menaughty by nature stretch.
Um, so OPP, your personal property.
coverage for that, but that's, that'sthe one that's the gray area, right?
(12:44):
Cause sometimes they're like, well,did you really have like some out of.
In your home,
Sara (12:49):
right?
Yeah.
So if you have a water damage claim,obviously demonstrating your personal
property losses are is relatively easybecause everything's still intact.
Fire is very difficult.
Um, every single homeownerspolicy has a requirement that
you submit an itemized inventory.
With the most, some of the mostridiculous details that nobody can
(13:09):
remember, like, you know, how muchyou paid for that sofa that you bought
in 1996 or, or something like that.
Um, it's, but it is a standardpolicy, and it is required in order
to, you know, substantiate the amountof losses, but insurance companies
are supposed to be reasonable.
Right.
Because when they are not reasonable,then they get sued for bad faith.
(13:30):
But
Bob (13:31):
this, I think this is the, this is the more gray where I think insurance
companies could trip up because ifthey really, it's like, I mean, come
on, people's houses burned down.
You have X amount of coverage.
Like obviously you could take alook at people's social media and be
like, yeah, they're, they're home.
The contents of their home and personalproperty is very likely over that.
So let's not mess around,
Sara (13:49):
right?
And that's really what theyshould be doing, especially in
the total loss circumstances.
Um, unfortunately right now they'renot, um, that being said, uh, there
was a bill recently introduced tothe state legislatures, um, that
would mandate the insurance companiesto, uh, waive the requirement that
you submit the itemized inventory.
(14:10):
Uh, in instances of total lossand shout out to my former high
school, uh, classmate and ASBpresident, Ben Allen, who is now
a state, uh, a state legislature.
And he, uh, he proposed that bill.
So
Bob (14:24):
Ben Allen's been a huge ally for consumers and victims.
Um, I mean, he's been, I've nevermet him, but I could see the
bills that he writes and support.
So Ben Allen, if you ever want to comeon the show, you're a huge advocate
for everything that we believe in.
So we'd love to talk to you
Sara (14:36):
and we'll have a San Juan high reunion.
Bob (14:38):
There we go.
So, um, We went through you file a claim.
This is some of the things we do.
Let's talk about another bucket offolks renters Uh, I get a lot of
questions about renters, uh businessrenters and homeowner renters.
What are their rights,
Sara (14:53):
right?
and so I'm, one of those people thatI I know What what toys I have to
play with in my sandbox and so inthat instance, I you know I talked to
landlord tenant attorneys who are moreFamiliar with the nuances of landlord
rights and things like that Um, if arenter, the issue that I'm seeing with
renters is, is that they get the stuffhandled for what they have coverage for.
(15:17):
So their personal property.
Their additional living expenses,
Bob (15:21):
but under which policy?
Sara (15:22):
So there there's a, so there's a renter's insurance has got, um,
there's, there's a renter's insurancepolicy and it basically covers
everything except the structure.
Bob (15:33):
So that's if they have a renter's.
Policy
Sara (15:35):
correct.
And it depends.
I think you can get structures coverageon a renter's policy just because of
what is defined as part of the building.
You know, if you bought a, youknow, if you made improvements to
your, to your, uh, apartment oryour condo, you know, that's part of
the realty, but that's still yours.
And so that should be covered underbuilding, but they are having,
(15:59):
what I'm seeing with renters isthey're having issues with the
landlords not doing the necessary.
repairs, cleaning, takingthe situation seriously with
respect to, to the building.
And in those instances, you know, we havethe implied warranty of habitability.
Bob (16:16):
So that's from a landlord, the owner of the property,
the employer, implied warrant.
It means you got to makegood on your property, right?
If you're renting to somebody and it'simplied that you'll do in good faith.
So you have landlord.
So I get this question alot, like landlord won't let
me back onto the premises.
Even to sift through my ashes.
My landlord won't let me back inor not Rehabbing the building yet
(16:38):
if it wasn't totally burnt downWhat do we do in these situations?
Sara (16:42):
Read your lease read your rental agreement go to the contract those
there are laws that apply to landlordtenant relationships But then there's
also the contract and that's whatI say with insurance claims too is
what it's what does the policy say?
Bob (16:54):
The
policy is a contract betweenyou and your insurance company.
Sara (16:57):
Yes
Bob (16:58):
Renter, look at your insurance between you and the landlord,
whether you're a business or arenter of your personal home.
Sara (17:06):
Yeah, no, I mean and especially too because some language, you know,
the language in those leases differsum, but at the you know, and often um,
There is a provision that if the propertybecomes uninhabitable that the tenant
is allowed to to break the lease Andthen can you know go free and clear?
Um the the rules regarding if somebodydoes do that the rules regarding regarding
(17:29):
um security deposits Obviously stillapply so it's and I will say with the
landlord tenant issues There are a lot oforganizations and agencies that specialize
in helping tenants and advising them oftheir rights so I definitely encourage
anybody that's got issues with theirlandlords to to reach out because Um, I
(17:49):
think that is definitely a particularlyvulnerable vulnerable population A segment
of the population that's being affected.
Bob (17:56):
So how about this situation this last topic just Homeowner property
owner has a renter It burns down.
Homeowner has a policy for rentalvalue, loss of rental value.
Now they weren't livingthere, they were renting it.
Can they use that, that coverage?
(18:17):
It's almost like a lossof income for the rental.
Sara (18:19):
What does the policy say?
Bob (18:20):
Uh, the typical policy just says like, So,
Sara (18:24):
so, Because they weren't living there.
Right, and so a typical policy recognizesthat, that that is a common occurrence.
And so they'll have, that's the true lossof use or fair rental value coverage.
Um, so if you've got an existingtenant and there's a lease and it
demonstrates how much you would havereceived in rent, you can submit
that to your insurance company.
Okay.
Um, and they would be requiredto reimburse you for that.
(18:47):
That being said, before, I, I, again,consult your policy before you, you
take that step because it, therecould be gray areas or it could be
sort of, you know, you didn't realizeit didn't have that coverage, um, so
you just always want to be, you know,very careful and do your due diligence
and, and every step of the claim.
Bob (19:07):
Yeah.
And that's where you get that number.
You divide it by however many monthsand see if you have enough time
to rebuild during that process.
Okay.
Thanks.
and still be able to recruityour fair rental value.
Sara (19:17):
Right.
Bob (19:17):
Great.
Um, so again, how dopeople reach you, Sarah?
Sara (19:20):
Um, they can, uh, they can, uh, they can send out the bat signal right now.
Um, they can't, I I'm on Instagramat the insurance Avenger.
Um, I can be reached at Sarahat the insurance Avenger.
com.
Um, and I, if people really wantto find me, I'm sure they can get
ahold of me one way or another.
Bob (19:39):
Yeah.
And you know, Sarah's a newmember coming to justice HQ.
We appreciate your insight and buildingthe community and teaching everybody
about insurance and stuff like this.
Cause I learned so much on this episode.
And you know, sticking withthe Avengers, I think you'd
love in a lot of our Locations.
Like we have a group in the orange Countyone, and we have a giant Hulk that's
actually down in the basement here.
So there's a lot of likeAvenger Jason stuff going on.
Sara (20:01):
Oh, totally.
No, it's a lifestyle.
Bob (20:02):
It's a lifestyle.
Well, thank you for, thankyou for fighting for folks.
Like Sarah's been like literallyboots on the ground, helping
people, you know, whether in achurch or like in a parking lot.
Um, giving people advice
Sara (20:14):
outside of the back of my, my minivan.
Bob (20:16):
Yeah.
Sara (20:17):
Shout out to the minivan mafia.
Bob (20:18):
Yeah.
Many vans are awesome.
You can put a lot of stuff in there.
Sara (20:20):
Oh, don't get me started.
I could do a whole episode on that.
Bob (20:24):
All right.
Thank you for listening to thisepisode of the justice team podcast
on the justice team network.
You can go to the justice team network.
com or you can watch on YouTube oranywhere it is, but please reach out
to Sarah with any insurance questions.
Thank you all very much.
Sara (20:35):
so much.
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