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Last Post 03/04/2012 4:59 PM by  Leland
Question on adjusting wood paneling
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Larry Finley
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01/24/2012 1:10 PM

    I am an adjuster with about 2 years experience of adjusting under my belt and have a general question.  Yesterday, I and another 2 year adjuster scoped a private dwelling covered under a named peril policy HO policy on a water claim from a sudden leak from a hot water tank.  The linoleum floor in the kitchen was damaged, as was the carpeting in the living room.  The kitchen and living rooms are actually 1 large rectangular room.  The room also has 30 year old wood paneling on all 4 walls, and the paneling along one of the walls sustained water damage, as well.  My general question is this.  Is wood paneling normally treated as paint, where you should replace the paneling on all four walls, due to the line of sight and matching arguments, or is the industry standard to just replace the paneling on the damaged wall only.  If we replace the wood paneling on all the walls, it will substantially increase the damages, as all the kitchen cabinets, and sink will then need to be pulled, and reset.

    The insured was not even aware he had damage, until we pointed it out to him. Right now we are leaning on replacing all the flooring and all the paneling on all four walls, but were wondering if this is the industry standard for adjusting wood paneling.  We realize we can obtain an agreed upon scope and just pay for the paneling on the one wall, but we want to be fair with the insured about this, and also properly adjust any future similar claims.  Any imput would be appreciated.

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    Leland
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    01/26/2012 4:58 PM
    why are you assuming the paneling cannot be matched? Did you get an expert opinion?

    Is the paneling coming apart, or discolored?

    is it an ACV policy or RCV?

    many times ACV policies pay only for the directly damaged area.

    an RCV policy is more likely to pay for matching, but the standard for matching depends on case law for the state you are in. Some states, like California, have a high standard for matching. In other states it might be OK to pay for something that is a reasonably close match, even if you can tell it is different.

    In California I have seen some changes lately to some cariers policies making it less likely they will owe for matching.

    What does your file examiner say?

    This is really a policy interpretation question, and it depends on the policy, the way your carrier interprets the policy, and your state law.
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    claims_ray
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    01/26/2012 7:26 PM
    Is it natural finish or painted as a lot of 30yr old paneling is? If it is painted typically not as hard to match the style.
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    CatAdjusterX
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    01/27/2012 2:53 AM
    Posted By Larry Finley on 24 Jan 2012 01:10 PM

    I am an adjuster with about 2 years experience of adjusting under my belt and have a general question.  Yesterday, I and another 2 year adjuster scoped a private dwelling covered under a named peril policy HO policy on a water claim from a sudden leak from a hot water tank.  The linoleum floor in the kitchen was damaged, as was the carpeting in the living room.  The kitchen and living rooms are actually 1 large rectangular room.  The room also has 30 year old wood paneling on all 4 walls, and the paneling along one of the walls sustained water damage, as well.  My general question is this.  Is wood paneling normally treated as paint, where you should replace the paneling on all four walls, due to the line of sight and matching arguments, or is the industry standard to just replace the paneling on the damaged wall only.  If we replace the wood paneling on all the walls, it will substantially increase the damages, as all the kitchen cabinets, and sink will then need to be pulled, and reset.

    The insured was not even aware he had damage, until we pointed it out to him. Right now we are leaning on replacing all the flooring and all the paneling on all four walls, but were wondering if this is the industry standard for adjusting wood paneling.  We realize we can obtain an agreed upon scope and just pay for the paneling on the one wall, but we want to be fair with the insured about this, and also properly adjust any future similar claims.  Any imput would be appreciated.

    ......................................................................................

     

    "We realize we can obtain an agreed upon scope" and just pay for the paneling on the one wall, but we want to be fair with the insured about this, and also properly adjust any future similar claims.

    If you have an agreed upon scope, then I assume a PA is involved or a plaintiff attorney, am I correct? Are you that PA or attorney?

     

    If you have two years experience and it appears that this is a daily claim as opposed to a CAT claim (where it could be expected for a rookie to be in a situation unfamiliar and therefore need assistance) one would be inclined to think either:

     A) you SHOULD already know the answer. Most HO policies are very clear in their verbage as to pay to match or not to pay to match.

     B) As a daily claims adjuster, you have something called a claims manager or team lead and they are there for just THAT reason: to answer such questions.

    If you are a PA or attorney consultant, just say so.

     

    "A good leader leads..... ..... but a great leader is followed !!" CatAdjusterX@gmail.com
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    Steve
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    01/30/2012 6:32 AM
    If this is an open claim that you are actively working, why are you wasting your time and delaying the claim settlement by looking for the answer to your question on this forum? Pick up the phone and call your supervisor for an immediate and correct answer. Don’t waste the insured’s time by casting about on a web site. Go to work.
    Steve McGraw Professional Adjuster
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    OkcLarryD
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    02/01/2012 10:59 AM
    Don't beat around the bush, Steve.

    Get to the point.

    Happy Trails
    Larry D Hardin
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    Mike Giles
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    02/05/2012 10:09 AM
    I agree. Call your manager and close the file. Unless you are waiting on the EMS invoice, you should send your estimate up the day you scope. Spend a few extra moments going over the scope with the policy holder/contractor. They will tell you what they most care about. If the homeowner tells you that they are not going to be happy unless you replace all four walls, then note it and pay for it. Otherwise you will be supplementing this one soon anyway. Afew hundred bucks for wood paneling is cheaper than a lawsuit. Get to work!
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    R. Estes
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    03/04/2012 1:56 PM

    Instead of being no help, and being assumed Larry,

    I will answer your question as follows:

    If your policy is a typical HO policy, and one wall of paneling is damaged, the carrier owes to replace that paneling and that includes any and all operations needed or required to perform the repair correctly. The policy does not owe for matching, unless there is state specific laws regarding matching (No state has a matching law on interior paneling; including California, that I am aware of).

    Bottom Line write the damaged paneling and the operators required for replacement, make sure to F-9 or notate on the estimate, and in your narrative and move on.

    Next time I would suggest write the estimate based on what you know, if it isnt right they will kick it back, and roll onto the next one. if you get Gigged, welcome to the school of hard knocks.

    Hope this helps and I'm sure your done with the Estimate by now.....

    "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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    Leland
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    03/04/2012 4:59 PM
    the state requirements for matching on an RCV policy is usually based on a regulation, sometimes a statute, and often with some case law to boot. The California regulation doesn't mention paneling specifically. Then again it also doesn't mention shingles, stucco, paint, baseboards, carpeting or any other specific material for that matter.

    Here is the California code Section 2695.9.

    Additional Standards Applicable to Fire and Extended Coverage Type Policies with Replacement Cost Coverage
    (a) When a fire and extended coverage insurance policy provides for the adjustment and settlement of first party losses based on replacement cost, the following standards apply:
    (1) When a loss requires repair or replacement of an item or part, any consequential physical damage incurred in making the repair or replacement not otherwise excluded by the policy shall be included in the loss. The insured shall not have to pay for depreciation nor any other cost except for the applicable deductible.

    (2) When a loss requires replacement of items and the replaced items do not match in quality, color or size, the insurer shall replace all items in the damaged area so as to conform to a reasonably uniform appearance.

    That last sentence is why undamaged carpet in an adjacent room can be paid for on an RCV policy, and that sentence is often referred to as the "line of sight rule".

    I believe the whole "line of sight" wording comes from case law, I don't think those words actually appear in the regulations.

    Here is a link to Kentucky's fair claim practices regulation, which has similar wording with the addition of wording that it applies to both interior and exterior.

    http://www.lrc.ky.gov/kar/806/012/095.htm

    Here is the Rhode Island regulation:

    When a loss requires replacement of items and the replaced items
    do not match in quality, color or size, the Insurer shall replace all
    such items so as to conform to a reasonably uniform appearance.
    This applies to interior and exterior losses. The Insured shall not
    bear any cost over the applicable deductible, if any.

    In Minnesota there was a well known case where the judge ruled that the exterior siding on an RCV policy needed to match, and since the old siding was no longer manufactured, the insurance company had to pay for all four sides.

    So what you have in Minnestoa is a statute or regulation which probably does not specifically mention exterior siding but a judge ruled it that it applied to exterior siding. So now you have case law that specifically mentions exterior siding, but not a regulation.

    So a Minnesota insurance company could theoretically decide that interior paneling was a whole different animal and they could refuse to follow the case law on exterior siding but I don't think this would be a successful approach. They would be shot down by the judge because the issue is so obviously similar and the statute or reg would apply the same way the first judge decided.

    In this scenario it would be correct in a very narrow sense to say that Minnesota doesn't have a law regarding matching interior paneling but it would be misleading, because the case law regarding exterior siding obviously applies to shingles and carpet and linoleum and paint and tile etc etc.

    It's like saying it's not illegal to drive 93.25 miles per hour. Technically that's true, but it is illegal to drive over 65 in most places so what's the point of splitting hairs in that narrow way.





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