[quote=“InsurerPerspective”]I’m not sure why I even bother, but regardless, I will “have fun with that”…
Policy premiums are set based on a lot of factors, including the MFL (maximum foreseeable loss). In a total loss situation, the analysis is no different…what is the reasonable, necessary, and incurred cost to put the insured back in the position he was before the loss. If a GC is needed and used, which I absolutely agree is more likely in a MFL situation, then my policy pays for it. But that doesnt mean I have to pay for it in every single claim, regardless of whether GC charges are necessary and incurred. Your concept of “unbiased indemnification loss value math” is silly. It has no application to my obligations under my policy.
As to who makes the decisions on GC involvement, reasonably necessary, etc., I don’t. My policy does. I apply the policy provisions. It is the contract between my company and its insured. The insured and I work together to come up with a reasonable application of the policy provisions. But, yes, in the end, since I have the checkbook I recognize that I effectively make the final decision as to payment. If the insured disagrees, like with any contract dispute, it can seek redress through the courts. And if I’m wrong, bad faith law compensates the insured.
Finally, I have read the TDI Bulletins…many times. As an aside, lets begin with this language in the bulletin:
Thus, the insured continues to be entitled to reasonable and necessary expenses to repair or replace the damaged property,
Thus, it appears that even your Biblicaly-applied Bulletins even agree with my use of the terms “reasonable and necessary”.
Further, as I quoted previously:
*Indemnity is the basis and foundation of insurance coverage. The objective is that the insured should neither reap economic gain nor incur a loss if adequately insured. This objective requires that the insured receive a payment equal to that of the covered loss so that the insured will be restored to the same position after the loss as before the loss. *
That is my driving and primary focus–what was reasonable, necessary and incurred (“indemnity”). I will pay what it costs to put the insured in the same position it was before the loss. That’s it. If GC involvement and payment of GC O&P is necessary to complete the repair work to accomplish that objective, I will pay it. But I will not pay it when it serves only to allow the insured, or more usually the roofing contractor, to “reap economic gain”. And lets all be honest here, that is typically what the 10+10 line items are used in Xactimate estimates are used for—just to jack up the claim and contractor profits.
Nowhere in the Bulletins does it state…even when read with precision…that O&P is owed on every claim. The clear and simple intent of the Bulletins is to advise that when calculating an ACV holdback/payment, the total RC claim value must be considered. If O&P and taxes are part of that RC figure, they must be included when calculating the ACV holdback/payment. That’s it. That’s all it says.
If I’m wrong, then show me the language that says O&P must be paid on every claim. Have fun with that.[/quote]
Sorry to “bother” you, and thank you for your candid reply.
Your partial quote from TDI Bulletin B-0045-98 skews your line of reasoning. When I come back to the office, we will go over the rest of the paragraph -and another.
Quote - "The Department´s position is based on the following:
– Indemnity is the basis and foundation of insurance coverage. The objective is that the insured should neither reap economic gain nor incur a loss if adequately insured. This objective requires that the insured receive a payment equal to that of the covered loss so that the insured will be restored to the same position after the loss as before the loss. The calculation of this payment results in under-compensation if an insurer deducts prospective contractors’ overhead and profit and sales tax in determining the actual cash value under a replacement cost policy. Conversely, the inclusion of contractor´s overhead and profit and sales tax on building materials does not over-compensate an insured for the amount of the loss because these items represent part of the insured´s loss."
“The value of contractor´s overhead and profit, as well as sales tax on building materials, has been included in the limit of liability for which the insured has paid premium. If the insurer in determining actual cash value excludes costs that are included in the determination of liability limits, on which the insured´s premium is based, the insurer reaps an illegal windfall because the insurer receives premium on insurable values for which loss may never be paid.”
“–The insurers’ argument that the cost of contractor´s overhead and profit and sales tax on building materials should be excluded from an actual cash value loss settlement because the insured has not incurred these expenses is not persuasive. Using this logic, an insured who opts not to repair or replace damaged property would not incur any of the expenses necessary to repair or replace the damaged property, including the costs of building materials, and would collect nothing under an actual cash value loss settlement. This result would be contrary to the purposes of the subject insurance policy.”
“…there is no situation in which the deduction from replacement cost of depreciation and contractor´s overhead and profit and/or sales tax on materials will be the correct measure of the insured´s loss.” -End Quote
General contractor replacement costs of insured structures is also the basis of the foundation of indemnifying the insured structure. You constantly miscalculate intrinsic loss dollar values by synthetically redefining those loss values in a skewed post-underwriting manner and (by espousing ambiguous and contradictory policy “language”) as to what clients are actually owed as simply natural and actual RCV-to-ACV insurable values owed them.
Since plumbing contractors do no replace structures - GC construction business “O&P” is necessarily part of construction business dollar math calculations (factored into premiums) so as to to properly indemnify a structure.
The on-the-fly damage complexity and number of trades indemnification mumbo-jumbo financial fakery, is just that. Hopefully you can see it is owed on every claim, because it is naturally charged for IN premiums, up to the limit of liability. Not naturally including it BACK IN your RCV-to-ACV calculations cheats consumers all over the USA of insurable values intrinsically woven into a loss.
Thus - “illegal windfall” is naturally created over and over again by your illegal financial transactions.