My apartment was set on fire

[Hien T Pham]

Hello everyone,

I managed a small apartment complex in California. 

Tenant set fire to a 1-bedroom apartment. He is now in custody for arson charge.

The fire was started in the bedroom which was most damaged. Drywall around an outlet was punched through and some holes in the ceiling was punched through. 

Smoke damages: Bedroom throughout. Some in the hallway, and restroom, living room. 

City inspector came down and wrote a notice saying there are no structural damage and that no permit is required, and that the city will consider restoration work as repair work. The inspector said the electrical outlet needs to be replaced and maybe the wiring around it. He said that we had to do that part first and let him inspect it first then cover with new drywall. 

OK. So Insurance company sent a claim adjuster to look at the apartment. He said the following: Bedroom:all walls will be gutted out and replaced.  The little hallway in front of the bedroom will be gutted out, all walls replaced. The restroom will only be cleaned and repainted , the vanity and sink with be replaced.  Bathtub will be cleaned. Smoke damages in the living room and kitchen will be cleaned . The floor tiles will be cleaned throughout and regrouted and sealed.

Then came these public adjusters who came and looked at the apartment and said they can get at least $40000 for us. But it seems like most of the money go to the contractors. They said the following: all the walls has to be gutted out and replaced with new insulation. Bedroom, kitchen, living. Floor tiles must be replaced throughout. One of the tiles broke so, due the continuation, the whole floors must be redone with tiles throughout bedroom, living room and kitchen. Restroom walls must also replaced and the bathtub must be replaced. Fridge, stove and AC must be replaced. Wall heater must be replaced. The kitchen cabinet must be replaced. The smoke came out of the back window onto the back wall of the apartment complex, so the whole back wall that covers another two adjacent apartment must be painted.

They said something about code upgrade that requires to replace the circuit panels of three apartments and that job alone is $40,000. Together it'll be $80000. But it must take time. It could be up to 6 months. 

The landlord, upon hearing all these numbers she got scared and she said that she would just hire a contractor/ handyman to write up an estimate and submit that estimate to the insurance company. Her husband think that the public adjusters are scammers. Also, the landlady think that if we claim so much money the premium will be doubled or trippled afterwards.

Riight now we are waiting for that estimate from the contractor  to submit to the insurance company.

 This is all new to us. I would like to know what is the best path to follow at this time ? Should we hire one of those P/A to represent us ? Or are they just scammers ? Should we hire a licensed contractor or an handyman will do? 

Please advise. Thanks. 

[Todd Rasmussen]

@Hien T Pham

If you don't have to pull a permit with the city, you won't be forced to upgrade the electrical panels. Most of the money does go to the contractors, and this is not an opportunity to be out of the situation better than you went into it. Your owner should be chasing a net zero situation. Going back and forth with a P/A is just going to land you in civil court with your insurance company over money.

That being said, the true value of the loss is probably between the insurance company's adjuster and the P/A's number. Get a couple quotes for what you think needs to be done and see how close the insurance company's number is. It's in their best interest to come to a reasonable agreement with your owner instead of driving this claim into civil court.

Don't worry about the dollar amount of your claim, 10K versus 20K are not going to matter much when it comes time for rate increases. Most likely the premium is already going to go up due to losing a claims free discount or they will be cancelled. Make sure you give them all the information for the tenant and renter's policy information if applicable in order to help your insurance company with subrogation efforts. (Doubt their rental insurance will cover intentional acts)

Since they are the victim of a crime, they should also reach out to the local court system and inquire about restitution funds. Don't know how those interact with insured losses, but it might be good information.

Lastly, if I owned this property, one of my questions to you once the situation seemed a little under control would be about an arsonist living in one of my units. Not saying this is your fault at all, but you may want to be prepared for the "how did this happen?" question. Things happen outside of our control, but we want to make sure we are avoiding the avoidable situations.

Where in CA? If you are LA local, I have a great value drywall guy and know some quality electricians and plumbers.3

Good luck!