California E&S Insurance

1.  Do not take the first offer.  They count on being able to take advantage of people in desperate need of cash to agree to a lowball figure.* 2.  Hire your own independent adjustor.  If you are going to negotiate, there will be a metric shit-ton of work involved, and adjustors earn their money.  More important IME, the adjustors know how the insurers work and are able to frame up claims using the right terminology and in the right format.  For example, State Farm uses proprietary software that literally breaks down each room of a house into square footage, identifies each layer of work required (for us, demolish walls, replace X' of studs, do smoke treatment A on remaining Y' of studs, apply smoke treatment B on Y' of studs, reinstall Z' of drywall, mud and tape Z' of drywall, primer on Z' of walls, top coat on Z' of walls, etc. etc. etc.) -- and then they apply a standard $/ft cost to each specific entry.  The estimate we got from SF was like 110pp long!  We could never, ever have put stuff in that format, nor could we have known enough to interpret how reasonable their estimate was -- for example, the costs can vary quite considerably depending on the level of the finishes involved, and as you can imagine, they're likely going to default to lower-level finishes unless you can prove otherwise.  Again, this is where a good adjustor earns their weight in gold.  (Did you know that decent oak hardwood flooring is running like 3x more than it was 15 years ago?  Or that windows had shot up to like $1,000+ per window for any sort of decent-quality double-paned?  I certainly didn't!) 3.  The way these things often work -- which may be your situation -- is that the insurance company will offer what they calculate as the depreciated value of the house, based on age, quality of materials, condition, etc.  In our case, that number came out to be about 60% of the total value.  If you have bought the rider for replacement coverage, they will pay the full cost of rebuilding, up to the policy limits -- but they want proof you actually plan to rebuild.  They're not going to pay you $1M to rebuild, then have you pocket the money, then sell off whatever remains for $500K and pocket that too.  If they're going to pay you $1M to rebuild, they want proof you're actually going to spend that money to rebuild (sometimes they want receipts, sometimes they just want a signed contract with a builder).  It sounds like rebuilding is off the table, so your focus will be on negotiating the depreciated value, based on all of the stuff I listed in 2. *When we had our fire, SF earned our loyalty with how they responded -- my agent was walking up my neighbor's sidewalk to meet us literally while the firefighters were still there to make sure we had a place to stay, clothes, etc.; he showed up the next morning with (again, literally) a blank check to cover whatever immediate needs we had, like a hotel and clothes and such (and he asked like 5 times, because he couldn't believe we refused!).  Then he sat and walked me through all of my coverage under the policy and explained the depreciated vs. replacement value stuff and what our riders and such covered and what we were going to need to document to trigger those.  We had a full payout for replacement coverage (up to the full policy limits) within 3 months, which from what I've heard is practically unheard of.  YMMV, of course -- my agent definitely earned his commission.

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