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  1. #1
    Forum Member trizahler's Avatar
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    Lightbulb Insurance Cost vs Benefit ?

    I have a question.

    When considering the cost effectiveness, speed, ease, and simplicity of building a new home today when compared to a more traditional and unique older generation home, would it be fisically wiser for insurance companies to rebuild an enitre new home post structure fire, or would it be more prudent to build upon the structure (sturcutral integirty still intact and certified as such), to it's former style?

    In my opinion it seems that it would cost more to employ skilled remodelers who understand how to safely engineer and rebuild a home to it's former style and stability (older generation), when compared to employing more inexpensive labor practices to produce a pre-fabricated, lighter, and mass produced home.

    Which begs the question: Actually, I will let all of you try to figure it out....

    Any opinions?
    Last edited by trizahler26; 01-10-2009 at 03:33 PM. Reason: Grammatical Error


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    Quote Originally Posted by trizahler26 View Post
    Which begs the question: Actually, I will let all of you try to figure it out....

    Any opinions?
    There is no question, we still will need to aggressively attack the fire whenever possible. People still live in the homes requiring our A game. They own property that cannot be replaced with money and expect us to do the job "we've" always done.

    Hypothetically, if we were to collectively stop putting out fires aggressively, one could conclude the insurance industry would react accordingly. Arson would be much more difficult to prove with significant losses of evidence, making it a far more attractive crime for those on the edge.

    Maybe you should contact insurance carriers in Bossier Parrish, LA and see what they do?

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    Quote Originally Posted by trizahler26 View Post
    I have a question.

    When considering the cost effectiveness, speed, ease, and simplicity of building a new home today when compared to a more traditional and unique older generation home, would it be fisically wiser for insurance companies to rebuild an enitre new home post structure fire, or would it be more prudent to build upon the structure (sturcutral integirty still intact and certified as such), to it's former style?

    In my opinion it seems that it would cost more to employ skilled remodelers who understand how to safely engineer and rebuild a home to it's former style and stability (older generation), when compared to employing more inexpensive labor practices to produce fabricated a pre-fabricated, lighter, and mass produced home.

    Which begs the question: Actually, I will let all of you try to figure it out....

    Any opinions?
    Wow, now my head hurts. What do you want to know? And what "benefit" are you talking about?

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    He thinks by hiring illegals from Ecuador on a Cash basis that he can save money rather than hiring competant American contractor (possibly with union labor) to rebuild a structure.

    FTM-PTB

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    It all depends on the extent of the damage. Just like when you wreck your car. It will also depend on your local contractor rates. In this area, the contractors who work on a residence are self employed or are very small companies, so the Union rates donít apply. You shop for the best value.
    Last edited by ScareCrow57; 01-10-2009 at 02:18 PM.

  6. #6
    Forum Member trizahler's Avatar
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    Question

    Maybe you should contact insurance carriers in Bossier Parrish, LA and see what they do?[/QUOTE]

    Why?

  7. #7
    Forum Member trizahler's Avatar
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    Quote Originally Posted by RFDACM02 View Post
    They own property that cannot be replaced with money and expect us to do the job "we've" always done.


    Hypothetically, if we were to collectively stop putting out fires aggressively, one could conclude the insurance industry would react accordingly. Arson would be much more difficult to prove with significant losses of evidence, making it a far more attractive crime for those on the edge.
    I agree with those two points.

    I completely agree with the first point.

    Though on the second point, how would successful arson investigations and corresponding justice compare in US taxpayer cost savings to my opinion?

  8. #8
    Forum Member trizahler's Avatar
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    Quote Originally Posted by ScareCrow57 View Post
    It all depends on the extent of the damage. Just like when you wreck your car. It will also depend on your local contractor rates. In this area, the contractors who work on a residence are self employed or are very small companies, so the Union rates donít apply. You shop for the best value.
    Exactly.

    I wonder what a nation wide study of what you propose would find as far as cost vs benefit.

  9. #9
    Forum Member trizahler's Avatar
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    Quote Originally Posted by RFDACM02 View Post
    There is no question, we still will need to aggressively attack the fire whenever possible.
    Why?

    When an average of 100 FF's lose their lives every year?

    How many of those deaths were due to an interior primary or secondary search for victims that were confirmed inside and still viable? I am guessing a small percentage based on the fact that the large majority are due to cardiac issues (pre-existing or situational, and responding to and from the incident.

    (just a guess though)

    http://www.usfa.dhs.gov/fireservice/...s/history.shtm
    Last edited by trizahler26; 01-10-2009 at 06:31 PM.

  10. #10
    Forum Member trizahler's Avatar
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    Quote Originally Posted by trizahler26 View Post
    Why?

    When an average of 100 FF's lose their lives every year?

    How many of those deaths were due to an interior primary or secondary search for victims that were confirmed inside and still viable? I am guessing a small percentage based on the fact that the large majority are due to cardiac issues (pre-existing or situational, and responding to and from the incident. (just a guess though)

    No firefighter I know or am friends with is worth a unconfirmed victim, a confirmed victim that is no longer viable due to fire conditions, and any personal property no matter how precious (wedding albums, family heirlooms, ect.)

    With regard to risk management practices a firefighter should be utilized to ensure life safety of entrapped victims that are viable.

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    I'll get this in before this thread goes off to the races..and it will.

    An insurance policy is a business contract between the insurance co. and the policyholder. The first page of the policy is called the Declarations Page. This page lists every coverage that is extended in the policy and how much money is afforded in coverage.

    When writing the policy, the insurance co. will rely on the policyholder to tell them how much the property is worth. Generally speaking, the policyholder is responsible for maintaining coverage in an amount equal to 80% of the value of the property. For example, if the property is worth $100,000, the policyholder is required by the terms of the policy to maintain $80,000 worht of insurance. This is called co-insurance. If the coverage falls below 80%, the insurance co. may penalize the policyholder by whatever percentage the coverage is short if there is a loss.

    You may ask, why don't you just insure the property for $1 million? Well, two reasons. First is that you will pay a higher premium (in some cases MUCH higher) than you would if you got the right amount of insurance. Secondly, there is a provision in the policy that requires the insurance co. to be no more liable than to replace or repair whatever is already there. For example, if you have a 2.5 story frame house worth $100,000, the insurance co. is only required to make you whole for that loss, not for an inflated loss amount. There are exceptions. For example, most homeowners policies will have a provision covering usually 25% above the loss amount for code upgrades. Thus, if you have a 100 year old home that sustains a major loss, the insurance co. will provide additional funding to make the new or repaired house meet code, even if that means putting things in the house that weren't there before. This would even count for code upgrades like roofing or electrical work.

    There are two ways the insurance co. writes policies that effect how the loss will be adjusted. The first is if the policy is written on an Actual Cash Value basis. Car insurance is written this way. Until about 15 years ago, most HO insurance was written this way, too. Actual cash value means the replacement cost of the property minus depreciation. For example, if you have a $500 refrigerator that is 5 years old, figuring the life expectancy of a refirgerator is 20 years, the insurance co. would depreciate the refrig about $125 and adjst the loss for $375.

    The other way, and this is the way most HO insurance is written today, is replacement cost. The insurance co. replaces or repairs exactly what is there. Even though the refrigerator is 5 years old, the replacement cost is $500, so that is the way the loss is adjusted. Obviously, a higher premium is charged for this coverage.

    That said, understand that the purpose of insurance is not to make a profit and not to come out better than you were before. The insurance contract requires the insurance to make you whole if there is a covered loss, and the property is covered. You will note that your policy will have a number of exclusions and limitations. For example, your policy will generally only pay $1000 for jewelry unless there is a specific rider with a schedule of jewelry covered with appraisals.

    Speaking strictly in terms of today, there is very little left to chance on calculating the damages from a fire loss. There are computer programs such as XACTIMATE that figure the damages and calculate to the nickel how much is a fair and just price to repair the damage. For example, an Andersen window only costs so much and it only takes so much labor to replace it. That is how much you get for that window. The insurance co. is required to pay prevailing, non-union labor rates for HO losses. So if you live in Podunk, you won't be getting a NYC union wage for the repair work.

    When the adjuster calculates the damage to the house, he calculates it without regard to the limits of the policy. Once the damages are calculated, there is a comparison done with the policy limits and a decision is made whether to declare the structure a total loss or a partial loss. A total loss is declared if the damages meet or exceed the policy limits. In truth, rarely is a loss a total loss from a structural standpoint. Much of the time when a total loss is declared, it is due to the financial considerations.

    The OP is correct. Alot of the time it is more financially feasible for the insurance co. to tear down and build new. But the insurance co. is a business and not a charity. They will make the best business decision for each loss.

    Now for the most important part of this post. I will bold it.

    To use the excuse that "the insurance co. will pay for it anyway" is a gutless and spineless reason to not properly fight a fire. Anyone, and I mean anyone, who believes this has no business whatsoever even being mentioned in the sam breath as the term "fire service".

    I trust I made myself clear.
    PROUD, HONORED AND HUMBLED RECIPIENT OF THE PURPLE HYDRANT AWARD - 10/2007.

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    Forum Member Rescue101's Avatar
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    LA got a brother? Lost from birth? Eerie coincidence? T.C.

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    Forum Member DeputyChiefGonzo's Avatar
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    Quote Originally Posted by Rescue101 View Post
    LA got a brother? Lost from birth? Eerie coincidence? T.C.
    The idea of that is scary as all hell...
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  14. #14
    Forum Member trizahler's Avatar
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    Quote Originally Posted by GeorgeWendtCFI View Post
    I
    To use the excuse that "the insurance co. will pay for it anyway" is a gutless and spineless reason to not properly fight a fire. Anyone, and I mean anyone, who believes this has no business whatsoever even being mentioned in the sam breath as the term "fire service".

    I trust I made myself clear.
    Yes you can trust in your ability to make yourself clear. Your post is thoughtful, detailed, and well written.

    Interesting response.

    I never mentioned anything about not fighting a structure fire, if indeed the reference of "spineless and gutless" was intended for me.

    I beleive in fighting struture fires for the record.

    I truly hope my opnion was not miscontrued as not beleieveing in fighting structure fires.

    I just asked a question and vocalized my opinions on the cost of rebuilding after a structure fire within certain parameters, and a stance on risk management.

    I hope this thread does not come down to unintelligent banter, name calling, and other forms of unproductive communication.

    I hope to see a thoughtful, honest, and data based answers and communication.

    That is up to all of you as members of the forum. It will be interesting to see if it happens.
    Last edited by trizahler26; 01-10-2009 at 06:26 PM.

  15. #15
    CFEI / CFII cubbie's Avatar
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    Quote Originally Posted by trizahler26 View Post
    I have a question.

    When considering the cost effectiveness, speed, ease, and simplicity of building a new home today when compared to a more traditional and unique older generation home, would it be fisically wiser for insurance companies to rebuild an enitre new home post structure fire, or would it be more prudent to build upon the structure (sturcutral integirty still intact and certified as such), to it's former style?

    In my opinion it seems that it would cost more to employ skilled remodelers who understand how to safely engineer and rebuild a home to it's former style and stability (older generation), when compared to employing more inexpensive labor practices to produce a pre-fabricated, lighter, and mass produced home.

    Which begs the question: Actually, I will let all of you try to figure it out....

    Any opinions?
    Here's my take on this. The insurance company does not care how you rebuild it. They pay the claim based on a report from their own adjuster. If your home is insured for $100,000. If it burns to the ground you get $100,000. If the adjuster says itís a 50% loss you get $50,000. The insurance company has no interest in how you spent the money. They have two main interests. One, full filling their contractual obligation to the homeowner. Two, subrogation to recover their losses if possible.

    I hope this helps.

    When fire is cried and danger is neigh,
    "God and the firemen" is the people's cry;
    But when 'tis out and all things righted,
    God is forgotten and the firemen slighted.
    ~Author unknown, from The Fireman's Journal, 18 Oct 1879

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    Quote Originally Posted by trizahler26 View Post
    Why?

    When an average of 100 FF's lose their lives every year?

    How many of those deaths were due to an interior primary or secondary search for victims that were confirmed inside and still viable? I am guessing a small percentage based on the fact that the large majority are due to cardiac issues (pre-existing or situational, and responding to and from the incident.

    (just a guess though)
    Because there is a lot more worth in a house then it's insured value. Which we don't know when we get there.

    Like victims, for one.

    What a ridiculous post.

    .
    I am now a past chief and the views, opinions, and comments are mine and mine alone. I do not speak for any department or in any official capacity. Although, they would be smart to listen to me.

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    Quote Originally Posted by trizahler26 View Post
    No firefighter I know or am friends with is worth a unconfirmed victim, a confirmed victim that is no longer viable due to fire conditions, and any personal property no matter how precious (wedding albums, family heirlooms, ect.)

    With regard to risk management practices a firefighter should be utilized to ensure life safety of entrapped victims that are viable.
    You are responding to your own posts?

    Sounds like you should consider another line of work. Firefighting is dangerous and people get hurt and killed.

    However, the efforts of the firefighters save thousands of lives every year. THAT is why we do it.

    .
    I am now a past chief and the views, opinions, and comments are mine and mine alone. I do not speak for any department or in any official capacity. Although, they would be smart to listen to me.

    "The last thing I want to do is hurt you. But it's still on the list."

    "When tempted to fight fire with fire, remember that the Fire Department usually uses water."

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    Quote Originally Posted by trizahler26 View Post
    I have a question.

    would it be fisically wiser for insurance companies to rebuild an enitre new home post structure fire, or would it be more prudent to build upon the structure (sturcutral integirty still intact and certified as such), to it's former style?
    That is for a building inspector to figure out.

    The fire department's job is to put the fire out, completely out as soon as they can. The building inspector decides if it is safe to rebuild or start over, not the insurance company. They only decide what they will pay for.
    Jason Knecht
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    Quote Originally Posted by cubbie View Post
    Here's my take on this. The insurance company does not care how you rebuild it. They pay the claim based on a report from their own adjuster. If your home is insured for $100,000. If it burns to the ground you get $100,000. If the adjuster says itís a 50% loss you get $50,000. The insurance company has no interest in how you spent the money. They have two main interests. One, full filling their contractual obligation to the homeowner. Two, subrogation to recover their losses if possible.

    I hope this helps.
    That's not exactly true. If you have a replacement cost policy, the insuance co. pays you the actual cash value until you repair or rebuils. The replacement cost portion is called the holdback. When you finish repair or rebuilding, the hold back is paid. This provides the incentive for the repair or rebiuld and discourages someone from taking the money and walking away.
    PROUD, HONORED AND HUMBLED RECIPIENT OF THE PURPLE HYDRANT AWARD - 10/2007.

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    Quote Originally Posted by Dickey View Post
    That is for a building inspector to figure out.

    The fire department's job is to put the fire out, completely out as soon as they can. The building inspector decides if it is safe to rebuild or start over, not the insurance company. They only decide what they will pay for.
    UNless the building is in imminent danger of collapse, the building inspector really doesn't care if the place is rebuilt or repaired. His main concern is going to be to make sure whatever happens is done to code. Rarely is a BI going to get involved in the repair vs. rebuild debate.
    PROUD, HONORED AND HUMBLED RECIPIENT OF THE PURPLE HYDRANT AWARD - 10/2007.

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