If the city workers accidentally burned down my storage building, should the city’s insurance company reimburse me for only 1/2 the value?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jan 18, 2012

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Insurance Question from Jackson, MS

Asked on 01/18/2012

If the city workers accidentally burned down my storage building, should the city’s insurance company reimburse me for only 1/2 the value? While burning trees, city workers allowed an ember to land on my storage building. It's a total loss, and I feel they should restore it completely, along with contents. The city's ins. had to know how old each item inside was before giving me an estimated value. They only want to give me 1/2 the value of a new building and various amounts on contents. Are they correct in giving me so little to replace everything, or is this the way it should be? I'm being told I should sue the city myself and not accept the check they are offering nor should I file a claim with MY insurance company.

Answer given on January 18, 2012

It seems the city is paying this claim at the Actual Cash Value (ACV) of your items. In this case, they would request the age of each item and take depreciation for the age. Did they mention that once the items are replaced, they then would pay you the different between the ACV and the replacement cost?  You could file a claim with your homeowners insurance, however, they will do the exact same thing–pay you ACV and when you replace the items, they will give you the replacement cost. The shed they would replace at the actual cost. However, once they pay you, they will subrogate (go after the city) to recoup the dollar amount of the claim. They would also try to recoup your deductible as well. Ask the city once you replace these items that were destroyed, will you get the full replacement cost paid to you and how you should go about claiming that difference. If they tell you that they will only pay the ACV, then you may have no choice but to go thru your homeowner’s insurance and let them subrogate.  You can always discuss the matter with a property attorney in your area if you feel that the city is not being fair an equitable.  To find one in your area, click here.    

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