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Last Post 11/12/2009 11:31 PM by  insprojohn
Grow House Claims
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Roy Estes
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Posts:155


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06/23/2009 9:52 PM
I believe the KEYWORD here is "SUDDEN AND ACCIDENTAL" obviously it is NOT ordinary wear and tear. Since this is a residential policy, or landlords policy ( I am guessing since it is a rental home) I do not believe that Vandalism is the right word, as the tenant intentionally and willfully made rental house into Grow house. My Initial Responce would be a denial, as an adjuster, as a PA, I would rebuild the house, Put on a new roof, Resod the lawn, Plant purty lil flowers, and a new front door ..... Oh did I mention Paint YESSS got to have lots and lots of Paint! HEHEHEHEHEHEHE!  from there let them litigate.
 
COMMERCIAL POLICY ...... Now thats a different story will need the Policy and the Endorsements/Exclusions to interpret.
"Each of us as human beings has a responsibility to reach out to help our brothers and sisters affected by disasters. One day it may be us or our loved ones needing someone to reach out and help." RC ESTES
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RJortberg
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Posts:147


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06/30/2009 4:29 PM
Here's one that I just read about: 25 houses involved in a single operation - 24,000 plants. They cut into the main power lines at each house to bypass the meters to avoid suspicion due to high electicity usage. They did all kinds of other special purpose "improvements / betterments":

http://www.westword.com/2009-06-25/...-the-case/

Seems these were purchased residences by the growers, so no claim, but I could see some ending up as claims if some were rented.
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wscook
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Posts:68


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11/03/2009 7:56 AM

Follow-up information

Insurers agreed to pay for related damages.

William S Cook

Public Adjuster

William S Cook Public Adjuster/Umpire/Appraiser
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Leland
Advanced Member
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Posts:741


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11/03/2009 11:08 AM
Well, life imitates chat forum. I now have a PCP home lab cleanup claim on a DP policy, just got it last week. The City Attorney is involved, he sees the clean up bids before I do. It has to be cleaned by court order. I'm not sure if there is going to be coverage. I will try to post what happens if I can.
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RJortberg
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11/03/2009 6:14 PM

What do you have to do / wear for your own protection to avoid getting affected by the meth lab? Mask?

In my valuation practice, I have been involved in one hotel assignment wherein a customer rented a room for use as a meth lab on a one-off basis. The impact on value was significant. It was not just a cost to cure but also an issue of stigma (future risk related to marketability after the fact about the meth lab is disclosed, etc.). This is somewhat like the terrorist guy in Denver who was making bombs in an extended stay place, but I do not think that would create as much stigma as a meth / PCP lab. Leland, I'm looking forward to see if you think there is coverage and if the claim is capped at the cost to cure.

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Leland
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11/03/2009 11:33 PM
There is a pollution exclusion in the Dp1 form but it is underneath the ordinance exclusion, in other words it appears to me that that portion of the cost a pollution cleanup that is related to government requirements is excluded, but that portion of the cost which is simply regular neccesary cleanup is covered, of course there has to be a covered peril.

Excuse my poor grammer, hard to diagram that coverage interpretation.

For a covered peril "V M & M" might work, but I'm waiting on the carriers decision.

My claim is a PCP lab, which is not the same as a meth lab. I have a copy of a cleanup protocol from an expert hired by the insured, I'll post the details later.

Now as far as a loss due to "stigma" that is very similar to the theory of reduced resale value in car crash claims, "diminished value".

As far as I know "diminished value" doesn't fly in California, and the DP1 policy for example only pays for the damaged property, some other property policies talk about direct damage vs. indirect,

to give you some other example of interesting things that a property policy doesn't pay for:

Pain and anguish of the owner having to deal with the claims process and sense of loss

temporary lost opportunity to market a property for sale

I could go on forever, these kinds of "losses" may be real in some sense, and you might even be able to put a dollar amount on them but because they are so subjective insurance is generally not able to cover them.

Imagine all the people in New Orleans who felt a profound sense of loss that their neighborhood was no more- how could anyone put a dollar amount on that. I think that's why HO policies never insure pets- you can't establish value for a pet. And if you look at life insurance, the settlement is always based on a face value of the policy established before the loss. Imagine if an insurance adjuster had to determine the value of Dad that passed away. It happens on a wrongful death claim, but not on first party.

I think diminished value claims are in the same category- yes the value of the house may be reduced by the past drug lab activity, but the policy doesn't cover this kind of "diminished value" loss even if it did how would you ever adjust those kinds of losses? War of the appraisers?

What if the drug activity was from a famous rock star and it actually made the house more valuable? Would the insured owe money to the insurance company? "Sid Vicious slept here.., only 5% down, #bed, 2ba...

I will say that I personally would not want to live in a house were serious criminal activity occurred due to the danger for more crime.

When I worked for a restoration contractor we had a claim where a house was fire bombed (malatov cocktail??) and it started the natural gas line on fire. The homeowner told us that the bad guys were targeting the PREVIOUS residents, who had been dealing drugs.

One reason that the claim I have now has the city attorney involved is because there were bullets flying at this particular property.
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RJortberg
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11/04/2009 1:46 AM

I agree about stigma... not covered in terms of the adjusting world. It is a huge deal in the somewhat parallel valuation world, especially for issues like the PCP/meth example, the Jon Benet Ramsey house, contaminated land, asbestos, etc. In these cases, the war is about the market value of the stigma because the cost to cure does not end the diminution of value. Fortunately, in the insurance world such risks are non-covered. I briefly was wondering if the DIC policies would cover this since it seemed to be a difference in condition, but Steve E. clarified that issue, just as you have here.

The nice thing about the claims business is that the coverages issues, while still open to lots of interpretation here and there, are largely procedural. Give the insurance industry kudos for being pretty explicit contractually as to what is covered vs. not covered. The industry does have some explaining to do in my mind about some long term declines in coverages especially in FL (exterior paint now not covered in wind policies, screen enclosure coverage is much more limited now, roof tiles now need to be broken, etc.), but it was either reduce coverages contractually like this or really jack up the rates to account for these large and common areas of loss. I'd guess the end result was a balancing act.

When your claim is done, I'd be curious to know if you learn the difference between a PCP clean up vs. a meth lab clean up. I also gather that this is a rental property (DP1) or this would be a non-issue.

There are some good nuances about a stigma premium... Would Neverland Ranch sell for a premium? Would the Dallas book bindery building where JFK was shot sell for a premium if it had not been raised... not insurance claims issues but still interesting to ponder. When I watch the Jay Leno show about what is bought on Ebay, it never ceases to amaze about what people will buy, so I'd not be surprised to see examples of a stigma premium.

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Ray Hall
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Posts:2443


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11/04/2009 9:20 AM

This is a good topic that has other branchs. Contingency business interruption is an insurable peril under inland marine coverage. I had one recently on  a summer camp that cancelled the third week of camp for an out break of H1N1, this was not covered as the health department did not demand the camp be closed, but it could be any reason of loss of income if the policy was a pure manuscript form. Rain insirance on a out door concert comes to mind. An accident in a gas gathering plant for natural gas causes it to be shurt down for several days and all the gas from the wells has to be shut in for seversal days resulting in loss income. Crude oil in the Missippi shuts down Budweiser for 3 days for lack of water quality to make Bud. On and on.

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insprojohn
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Posts:60


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11/12/2009 8:08 PM

My opinion as an agent that sold commercial insurance policies is that if an owner has a property management company managing the property while he or she is some place else then the "non knowing what is going with the property" aka unaware of the crazy stuff happening at the home is a valid excuse.  However, if the policy clearly EXCLUDES ILLEGAL ACTIVITIES then the coverage should be excluded?  Again though the policy will have to exclude illegal activities.  For example: Say you have a Fort Lauderdale 500 unit apartment complex and one of your tenants is a drug user and/or dealer.  The police come to the tenant's apartment [your property] and smash in the rear window, front door and probably do a lot of damage if they also throw in a bang grenade that starts a small fire in the apartment. Well if illegal activities is excluded then you have no coverage (maybe) as is the illegal activities exclusion applicable to the proeprty owner or the property tenants?  Or both?  I have heard that some apartments actually require their tenants to have an HO4 renters policy to accept all liability that occurs in their apartment.  Which would mean that if something were excluded under their CP1030 Special Form Policy such as illegal activity  that they are gonna have to HOPE illegal activity is not specifically excluded by the HO4 policy.  Anyway...  I am interested in all replies.

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insprojohn
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Posts:60


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11/12/2009 11:31 PM

Leland these court cases are pretty good. Where did you find this info?

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