(MONEY Magazine) – Q. My house burned down a year ago. I have insurance that's supposed to cover replacement costs, but the insurance company made a lowball offer. Then it cut off my living expenses reimbursement. I hired a public adjuster to help me with the claim, but now the insurer won't return my calls. Help! ROBERT MOSLEY, GREENBURGH, N.Y.
A. There's no tangle like a claims tangle, but we sorted out what went wrong. First, let's talk about your policy. You purchased guaranteed full-replacement-cost coverage, which is supposed to help you get your home back to the exact condition it was in before the claim. Smart move. These policies typically include construction, materials and architectural costs associated with replacing your 1955-era home. But there are limits. No remodeling is allowed, for instance; so if you want to replace your old claw-foot tub with a Jacuzzi, you pay the difference. One thing that can really burn a policyholder: Full-replacement policies don't cover construction associated with building-code updates required by a municipality (typically in areas like electrical wiring and plumbing). For those costs to be picked up by your insurer, MetLife, you'd have to have purchased an additional coverage called an ordinance or law endorsement. You didn't. Those costs will be your responsibility, so budget accordingly. (And consider upgrading your policy every five to 10 years—building codes can change frequently.)
Remember, Robert: The claims process in in the end a negotiating process. So we asked MetLife senior rep David Hammarstrom for the scoop on its seemingly low estimate. He says that in cases like these MetLife suggests a third-party reviewer, known in the insurance biz as a backup contractor, to resolve the dispute—someone local and respected in the community. "That contractor will review the current estimate, walk the premises and tell us if we have to revise our estimate upward," says Hammarstrom.
As for your unpaid living expenses, Hammarstrom says your policy does indeed cover additional living expenses (ALEs) to help pay the rent while you resolve your claim and reconstruction is completed. The great news: Your ALE coverage is still in effect. The not-so-great: There was a snafu. After MetLife submitted its unsatisfactory rebuilding estimate, you hired a public insurance adjuster to go to bat for you. (A public adjuster is a claims expert who represents the policyholder in insurance payout negotiations. Certified adjusters can be found via napia.com.) Another smart move, in theory. But your adjuster didn't ask you for, or submit on your behalf, the ALE paperwork MetLife needed. (He told me he didn't know he was supposed to.) There's the rub: Because your insurance company is now obligated to speak to your rep, not you, your calls and letters went unanswered. "If the public adjuster does not submit the bills," Hammarstrom says, "we don't know that they've been incurred." Of course, red tape can cut both ways. You lost your first contact at MetLife after he was promoted; your current contact there has only had the case a few months. I'd say miscommunications on both sides were factors here.
So as we went to press, you had just had a group meeting at the homesite with four (count 'em: four!) MetLife folks and your public adjuster. The MetLifers came armed with checks for a little over $21,000 to reimburse you for the living expenses you'd been shelling out for nearly six months. Good luck rebuilding, Robert. And invite us to your housewarming!N