Insurance claim struggle

[Lior Golan]

Hello everyone,

I bought a property in Cleveland area in February this year. In the beginning it was for BRRRR but as it was my first investment property, I had made some mistakes on the way which caused to understate also that I can't refinance with good terms right now and also spent more money that I initiated thought...

As part of my rehab there, I also finished the basement with additional bedroom and bathroom.

On of the mistakes was that i accepted my contractor to do an high floor in the bathroom to reduce cost on moving pipes under the concrete basement floor.

In July the pipes were burst in the basement and flooded all of it (another mistake that I didn’t replace the old pipes). After replacing the pipes and trying to dry the entire basement, mold started to appear there.

When called to one of mold companies, they said that I can use the insurance to cover the expenses for the mold remediation, so I did contacted the insurance...

They came and saw everything and gave me an estimate of 13K to try and repair the damage. But when consulting with some mold companies they adviced that I need to demo the entire basement mainly also the high basement bathroom because there is framing under it which could have a lot of mold. That means that I need to demo and finish again the basement with bedroom and bathroom (probably save some pieces like the bath...).

I brought few contractors and they gave me an estimate ranging 15-30 for finishing the basement after the remediation. I had a good feeling with the one that gave me 25k for finishing it and with a mold company the estimate 4K for demo and mold remediation the entire basement - something like 30k.

Tried to bring these estimates to the insurance and they brought another coordinator to see the damage and told me that u have another leak from the bathroom upstairs hence cannot find me the full amount. Of course this is a lie, I brought a waterproofing company to give me a certificate that there is no such a Leak.

Sent them that and they got softer abs says that they will out the scope of work to a rehab calculator software and then will give me that estimate. The estimate came with JUST 15k!! Just 2K more that the first offer from them.

I am now don’t know what to do... they offered me to get that money and maybe they could bring me more on the way, but I don’t believe them!

What would you do instead of me?

Thank you for the reading!

[Matthew Olszak]

Definitely hire a Public Adjuster to represent you. This is a standard practice of insurance companies to underpay and act like its some matter-of-fact situation and that you have no other options but to accept their lowball. They know most folks will only go through the claim process maybe once or twice in their life. Its like when you deal with a tenant who has never been evicted vs. one that has - the one that has will know exactly how they can prolong and delay eventually getting kicked out and isn't afraid of the process.

The estimating program they use is Xactimate which every PA uses as well, but the end result is only as accurate as the line items they enter - insurers frequently leave off a ton of stuff you'd assume is included but isn't. A PA will also know statutory deadlines and the insurance laws carriers must follow in order to hold their feet to the fire.

But on that note, do your due diligence, because just like when hiring any other professional, there are a bunch of really crappy ones out there. The fee on that size claim is probably going to be 15-20%, but if the PA knows what they are doing you'll come out with even more $ even AFTER the fee is paid.