Last September, a devastating fire roared through Boulder County, Colorado. The 7000 acre blaze devastated the area and many properties were damaged or destroyed. One policyholder recently expressed his frustrations with the insurance claim for his fire damage to reporter Dayle Cedars with 7News in Denver. Although spared from losing his home, Joshua Onysko, has not been made whole. Farmers Insurance Company did issue a payment to Onysko, but the amount was insufficient to fix the property. The homeowner hired licensed public adjuster Scott deLuise, of Matrix Business Consulting, to assist with the claim.

DeLuise prepared the claim on behalf of Onysko, and during the evaluation of the damages, he learned from an industrial hygienist that the insulation and the walls of the property were damaged by smoke. In order to replace the insulation, the insured must remove the sheetrock or take the siding off from the outside.

According to the news report, Farmers’s spokeman, Mark Toohey, said the company has already paid for a deodorizing technique to treat the damages inside the walls. After being contacted by 7News, a Farmers representative said they would visit the loss again. As of the time of his post, however, Farmers would not agree to appraise the damages with the insured.

Dayle Cedars reported that the Colorado Division of Insurance considers appraisal proper “only when there are discrepancies concerning value, the actual cost of an item or items. In situations where the ‘scope’ of the claim is in question, a third party is not required. The Division of Insurance cannot force an insurance company to pay a claim or to go through the appraisal process with a third party, known as an umpire.”

Many policies provide for appraisal when there is a disagreement regarding the amount of the loss. To set the amount of loss, the scope of damages should to be reviewed by the appraisers and the umpire. Thus, it seems the Division of Insurance’s limitation of appraisal to exclude scope of damages is off base.

The Colorado Department of Regulatory Agencies Division of Insurance’s bulletin, Insurer Requirements Related to Disputed Claims Subject to Appraisal, does not specifically exclude evaluating the scope of damages in an appraisal. It states “most, if not all, property insurance policy contracts include an appraisal clause which may be invoked if there is a dispute between the insured and the insurer regarding a coverage determination, the claim handling process, or the settlement amount.”

Unfortunately, Joshua Onysko is not alone in his fight against his insurance company. The reporter for 7News uncovered 18 others who were having problems. Scott deLuise explained that United Policyholders has been actively helping the victims of the fire loss learn more about insurance. Amy Bach, of United Policyholders, advised that her group is partnering with the County of Boulder to host a series of educational workshops. The next workshop will be held on Monday, January 10, 2011. The information provided to the policyholders from the last educational session is available here.

Next week, my post will feature more information about the situation in Boulder.