August 17, 2019
All of us who have lost homes in the Tubbs Fire and opted for the OES/FEMA public debris removal option have been warned to hold onto the funds designated for the debris removal bill, which we can expect to receive long after those services were rendered–two or more years later, and for a large sum, potentially tens of thousands of dollars. But if your insurance claim fell short of your rebuild cost, relief could be in site. We asked insurance expert Lihn Pham, Scope Writing Services, LLC to explain:
One of the major benefits provided by our Federal and State agencies is the Debris Removal Program instated by FEMA, in cooperation with the State and local Building Departments for the nationally registered Fire Disasters California has experienced over the last decade. The following is a short synopsis obtained through the County of Sonoma/City of Santa Rosa website, through the FAQ section, at the following
Here is the excerpt from the website pertaining to the Debris Removal Program:
“Phase I of the Program is being conducted at no cost to property owners. If you choose to participate in Phase II of the Program, there is no cost to the property owner, and removal will be completed in compliance with all local, state and federal laws. If you had insurance in effect at the time of the wildfire that provides coverage for debris removal, it is required that those funds, not used for rebuilding, go toward reimbursement of Program costs. In most cases, the cost of debris removal will be greater than the insurance available. Reimbursement amount will not exceed the costs of debris removal on your specific property.
If coverage for debris removal is not a separate insurance category, any reimbursement for debris removal will be limited to the unused benefit amount (if any) in that coverage category after the residence is rebuilt. If the full amount of general coverage is used for rebuilding, you will not be responsible for any reimbursement. If you participate in Phase II of the program, we recommend that you consult with your insurance carrier to confirm how much is dedicated to debris removal. If your site will require private debris removal in addition to what is covered under the USACE Phase II, you can use your debris insurance proceeds to cover those costs, and will only be expected to assign the remainder to reimburse the Program. If you do not have insurance the Program will be provided at no cost.”
What does this mean to those who have participated and “Opted-in” to the FEMA Debris Removal Program?
For those who are properly insured and have no issues with insurance coverage limits to rebuild or to purchase replacement homes, the program requires that once a debris removal bill is received through the County or City agency that is coordinating with FEMA, the invoice should be forwarded to the Homeowner’s insurance carrier for payment. Please recall that as a condition of “Opting in” to the Debris Removal Program, Homeowners had to sign a document authorizing FEMA to bill and collect directly from the insurance carriers for the cost of the work performed on behalf of the Homeowners.
For those who were underinsured, your debris bill will be waived
For those homeowners who were underinsured, your debris removal bill will be waived if you can prove that all of your insurance proceeds was needed for the replacement purchase or rebuilding of your homes.
Once you receive the debris removal bill, send a cover letter to the coordinating agency (that sent you the bill) to ask that they rescind your bill and waive your debris removal costs. Include:
- a copy of the bill from FEMA,
- a summary of your insurance settlement (settlement letter outlining your claim settlement, or a Summary/Statement of Loss showing payment of your limits),
- and copies of your Contractor’s estimate/invoice showing the cost of construction that exceeds your insurance limits or the real estate sales/purchase agreement,
as these documents will “prove” to the program coordinators that all of your insurance proceeds are necessarily used for your home replacement or rebuild.