Has anyone else exceeded their liability limit?


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We had a fire in our apartment about 2 years ago. The fire itself wasn’t bad, but it set off the sprinklers and flooded our apartment + 6 others. (No one was home when it happened). Apparently the statute of limitations in the state where it happened is 2 years, so we’re approaching the end of the claim. The cause of the fire itself is somewhat suspicious, but our insurance company accepted liability because, as the man on the phone said, “it’s easier that way.”

Of course, it didn’t take long for the claims from everyone else affected to start rolling in. The Homeowners Association alone submitted a claim for $480,000. Initially, it looked like the landlord’s homeowners insurance (from the same company as our renters) was going to cover his share, but at the last minute they decided to try and get the money from our policy instead. And of course there are assorted other claims from the other units that had damage.

Our liability limit is $500,000, which is the maximum that the insurance company offered at the time. Of course, if they handed out everything that everyone wanted it would be substantially over that. My communication with the insurance adjuster has indicated that their goal is to settle with all the parties and keep the total under the liability limit. The latest I heard is that they have retained a lawyer to handle the settlement.

So, all that’s well and good, and my expectation is that everything will be OK. But what if people refuse to settle? How often does that happen? Is the fact that I had max liability and couldn’t have gotten any more taken into consideration?

If anyone has firsthand experience with this and can help me set my mind at ease that would be appreciated. I’m really trying to not let this eat at me too much, but it’s scary. If it turns into a big ugly lawsuit we could very easily lose our house.
The cause of the fire itself is somewhat suspicious

How is it suspicious if nobody was there when it started?

Did the fire department investigate? Do you have their report?

our insurance company accepted liability because, as the man on the phone said, “it’s easier that way.”

That could be bad faith. Your insurance owes you a proper investigation and defense, not the easy way.

If it turns into a big ugly lawsuit we could very easily lose our house.

In some states your home would be exempt from judgment? What state are you located in?
  • The suspicious part is that when the fire happened, we were in the process of moving out of the apartment due to mold. The landlord and the mold remediation company had been there that afternoon to discuss what would need to be ripped out (which I believe included the entire kitchen floor) and how much it was going to cost. I had spent the day there packing up things in an N95 mask (it was that bad). After I left for the evening, the stove somehow turned on and caught one of the boxes on fire. We hadn’t lived or cooked anything in the apartment for approximately 2 weeks at that point. Once the fire and the flood happened the landlord conveniently got a whole new apartment courtesy of our renters insurance.
  • I have the fire department report somewhere. The cause was listed as “unattended food.” I called both the fire department and the police but they said that since they felt that there was no evidence of arson they were not interested in investigating any further (the real world doesn’t work like TV crime shows, kids). The building is key card access and has security cameras, but the HOA refused to release the access records or the footage without a police warrant.
-The only investigation (the one that locked us out of the apartment) was done by the HOA’s insurance company. (“We are ____. Bum-ba-dum-bum-bum-bum-bum”). It was done by a third party company who (not surprisingly) refused to release any sort of report to me. Our insurance company (the one with the guy in the red shirt) flat out said that they weren’t interested in investigating or even seeing anything in person. I don’t know if they had any communication with the investigation company or not. Based on the phone number the adjuster handling the liability claim seems to be in AZ, several states away.
  • The fire happened in CO; we live in UT now.
@brendaperiah If you own a home in Utah now, you picked a good state to live in. Utah exempts homestead from judgments but I think you have to file a declaration of homestead. Look into it, as well as other exemptions.

If it looks like all the claims will exceed your limits, I suggest you talk to an insurance bad faith lawyer about your insurance taking the easy way.

With those details and a $500,000 claim I would have hired an independent investigator.
@brendaperiah Wow, so sorry for the mess you have face. But so thankful for the details you have shared this will be my first time purchasing insurance so I am trying to educate myself. Give it to God

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