It’s been quite the litigious couple of years for one of the biggest insurance companies in the nation. In the latest, USAA Insurance has been hit with a lawsuit claiming they significantly underestimated repair values – a claim USAA has been battling in court for some time in other states.
On Thursday, July 17, a case was moved from a Colorado district court to a federal court. Essentially, a Colorado couple’s home was struck by lightning on May 30, 2023. The Colorado city of Aurora, just a little east of Denver, ruled the home uninhabitable that same day.
For more than a year after, Donnell and Susan Encalade would engage in a back and forth with USAA over how much it actually cost to get the home back to being livable. By June 7 of that year, the military insurer offered $70,223 replacement cost value or $52,022 actual cash value – numbers that would climb over the coming months after the Encalade family said the numbers failed to include repair to their roof, windows, siding, framing, electrical system and other interior and exterior damage.
“After USAA completed USAA First Estimate, Plaintiffs’ general contractor provided USAA with additional information outlining numerous line items necessary to repair the Lightning damage and requested USAA to update its estimate of repairs,” the lawsuit against USAA reads. “Upon receipt of Plaintiffs’ contractor’s communications outlining omitted line items, Defendant knew, or should have known that Defendant’s First Estimate grossly understated the scope and cost repair the Home.”
The two sides argued over amounts for the next couple months, including USAA ordering the Encalades’ construction contractor to hire Cardinal Electric to assess electrical damage. The couple says the company was not a licensed engineer. By August of 2023, USAA was ordering the immediate demolition and repair work to begin, though the customers had not yet reached a payout amount they say could cover the repairs.
This is when USAA began warning payments for the family’s rental while their home was uninhabitable would end. On October 10 of 2023, the insurer said additional living expenses would cease on November 23 of that year. USAA offered an adjusted claim payout amount 15 days later that October, totaling just over $89,000 in replacement cost value or about $70,000 in actual cost value.
Again, the Encalade family argued this was not enough. Yet, USAA allegedly stopped paying the couples’ cost of housing while they were unable to return home on November 24, 2023, amid a request for a higher payout. This came even after documentation from the City of Aurora was submitted to USAA which called for additional “structural and electrical repairs.”
After nearly three more months of back and forth, a new claim manager and adjuster from USAA and a break-in after USAA declined to cover security fencing around the vacant home, the insurance company agreed to resume housing cost coverage on August 23, 2024. The company was out of pocket for housing for nearly 10 months.
Nearly a year and a half after the home was struck by lighting and deemed unlivable, the two parties seem to agree on how much it would cost to fix it. USAA offered $297,610 in repair cost value or $226,142 in actual cost value – more than $200,000 in each case than the original offer.
The couple now wants to be paid for what they say was an unreasonable delay of payment for insurance benefits and bad faith actions. They also want to be reimbursed for the money they have shelled out over the past two years, including attorney fees.
Just how much the Encalade family wants to get from this lawsuit is unclear, but USAA had the case moved to federal court saying they payout would exceed $75,000. USAA was initially required to submit a response to the lawsuit by mid-July, but they have been granted an extension to respond by August 1.
“At USAA, we pride ourselves on our long-standing commitment to serving the military community and our members, consistently delivering value through our financial products and services. We are reviewing the lawsuit and will respond accordingly,” a USAA spokesperson told .
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