In situations where there is a loss, whether that be fire, tornado, flood, wind, or falling trees; legal disputes may arise when the cost of the replacement does not match the offer from the insurance company, for settlement purposes. In this case, the replacement is more than the offer from the insurance company to settle the claim and the insured then has to pay out of their own pocket for the difference. This means that the only option for the insured, to recover the difference, is to retain legal counsel to act on their behalf and of course the insurance company reciprocates with the retention of legal counsel as well.
The Dispute Settlement Process
When there is a dispute, both sides will first look at the coverages that were in place at the time of the loss. Then, both parties can obtain quotes from a variety of contractors to substantiate their position. If the quotes do not match what the stated coverages in the insurance policy are, then they would look at where the recommendations for the stated coverages came from as sources could include the insured, insurance agent, the broker, an underwriter, the insurance company, outside sources, or a combination of all of these.
Cases Where a Costing Manual or Service Was Used
If a costing manual or service was used, then they would delve into how the estimated Replacement Cost New was calculated and if it is an ACV (Actual Cash Value) situation, then they would investigate how the depreciation rate was arrived at and how it was applied.
The Challenges of Retrospective Valuations
As time passes from the date of the loss to actually getting both sides to the table for discussion of the resolution of the issues, the estimating of the Replacement Cost and the Actual Cash Value, now becomes not a current value, but a Retrospective Valuation.
In a Retrospective Valuation situation, most contractors do not wish to go back in time to estimate the Replacement Cost New, as it is not something that will benefit them and some may refuse to get involved in order to avoid having to spend time in court as an expert witness.
How the Douglas Cost Guide Can Assist in Dispute Settlements
In these cases, especially when it comes down to a Retrospective Valuation, sometimes the only source to gather historical costing data and estimates is with the use of a Cost Guide. The Douglas Cost Guide can provide this service to lawyers, insurance professionals, and property owners who are looking to obtain accurate, industry-standard estimates at the moment of the loss for the purposes of dispute settlement.