Guide to insurance and debris removal cleanup costs

Source: DebrisCleanupNews.com

With debris removal work completed on more properties every day, the next question for many property owners is: do I need to pay for this, either directly or through my insurance? 

The short answer is no, not up front. The State of Oregon is covering all up-front costs of debris removal cleanup. In exchange for the Federal Emergency Management Agency (FEMA) assisting the state with debris removal following the 2020 wildfires, the state is responsible for collecting information from participating property owners to determine whether any insurance proceeds designated for debris removal need to be collected by the state to help offset the government’s debris cleanup costs. FEMA requires the state to ensure there is no duplication of insurance funds paid to property owners. A duplication would occur if an owner participated in the Step 2 program, had the state clean up their property for free and then kept insurance funds paid out specifically for debris removal.

The state will seek funds from one of two sources, based on the property insurance policy:

• Funds in a policy that are designated for debris removal (stated benefit); or
• General funds, that include coverage for debris removal, which are left over after an owner has rebuilt their home or business and replaced their contents.

If you don’t have a stated benefit for debris removal, the state will only seek funds from your insurance after you’ve rebuilt your home or business. 

Your insurance policy will direct what limits are available for rebuilding your property. So, for example, if your policy pays out $100,000 for your destroyed home and you spent the full $100,000 rebuilding your home, the state will not seek any of that $100,000 that came from the insurance company. However, let’s say you only spent $80,000; then the state would seek up to the unspent $20,000.

When and how the state seeks reimbursement is unique to each insurance policy. Read below for more information about that process. If you still have questions, call the debris cleanup hotline at 503-934-1700.

Specifics for manufactured (mobile) homes

• Insurance policies for manufactured homes typically have a stated amount designated for debris removal.
• A contractor for the state will contact the policyholder after cleanup occurs to determine whether or not funds have been used for cleanup.
• Insurance funds used for cleanup costs will not be collected by the state. They’ll ask for proof of fund use, so have that ready.
• If funds were not used, they’ll ask for reimbursement.
• If the manufactured home was located in a park, the individual manufactured homeowner may have given their designated funds to the park owner for cleanup. In this case, the contractor for the state will ask for proof that the funds were given to the park owner, and will not seek reimbursement from the manufactured home owner.

Specifics for stick-built homes

• Policies for residential, stick-built homes typically do not have a specified amount designated for debris removal.
• A contractor for the state will not seek reimbursement until after the home has been rebuilt.
• If there are any remaining benefits available for debris removal under the policy, those funds will be requested for reimbursement for cleanup costs.

Specifics for commercial properties

• Policies for commercial properties can vary, so we recommend working with your insurance agent directly to understand the specifics of benefits available for debris removal in your policy.
• A contractor for the state will contact the policyholder after cleanup occurs to determine how the insurance policy provides for debris removal benefits and whether or not funds have been used for cleanup.
• Designated insurance funds used for cleanup costs will not be collected by the state. They will ask for proof of fund use, so have that ready.
• If funds were not used, they will ask for reimbursement.

Other common insurance questions 

I did some cleanup work myself, but then opted in to Step 2, debris cleanup. What does that mean for me and my available insurance benefit? 

• Make sure you have contacted your insurance adjuster about your situation.
• The state will not request reimbursement from insurance funds you have used for debris cleanup. You will be asked to provide documentation of all debris cleanup costs you paid for.
• However, the state may ask for any remaining benefits available for debris removal under the policy after you have rebuilt your home. This is to prevent duplication of benefits. 

I’m participating in Step 2, debris cleanup, but I’m not insured. What happens in my situation?

• The state will not request any reimbursement from you.

What if I do not plan to rebuild my home or business? 

• The state will only seek reimbursement when there is a designated amount that’s been paid for debris removal and listed in the loss settlement documentation.

How will the state request reimbursement from insurance funds for newly-acquired properties? Who is responsible for paying?

• The state will only request reimbursement from insurance funds from whoever owned the property at the time of loss.

Are there any restrictions to new property owners?

• From an insurance perspective, none. If you are a new property owner and are ready to rebuild, check with your local building department for state, county, city or local permitting requirements.