All You Need to Know About Opting In or Opting Out – A Step by Step Guide for the Camp Fire
We’re sincerely sorry that another community is going through this painful process. Our firm, Guzi-West Inspection and Consulting, is based in Redding and we just went through the opt-in and opt-out, debris cleanup, soil testing, and documentation process in the Carr Fire in Shasta County. We’ve interviewed insurance agents, demolition contractors, city/county officials, and asbestos abatement contractors that worked on the Sonoma and Weed fires in order to properly advise our clients. You can either opt-in or opt-out of the debris removal program.
- Opting-In – the state manages the clean-up of your property.
- Opting-Out – utilizing your insurance coverage to retain private contractors and manage the clean-up of your property yourself.
Both options have pros and cons as explained below.
Why wouldn’t all homeowners simply opt-in?
If my home were destroyed, I’d want to have control over how long it takes for my property to be returned to me to re-build. This is the biggest downside to opting-in. Opting-in allows the government 36 months to inspect, test, remove, and clear wildfire-generated debris from your property before you’re allowed to start re-building. Some homeowners will fortunately be on the early portion of the 3 years, but it’s likely that others will be later. I’m sure many homeowners have heard the nightmare stories from Sonoma about governmental contractors over-excavating to get paid more, or homeowners opting-in only to receive a bill after the cleanup for costs beyond what the state-sponsored program covers. However—I did not see either scenario play out in the Carr Fire and I commend the state and local officials for the job they’ve done in Redding.
The other legitimate problem with opting-in is that homeowners can’t choose to preserve a foundation or some unique part of their property. They can if they’re working one on one with a retained demolition contractor (choosing to opt-out).
The steps outlined below should help you make an educated decision based upon your specific situation.
Step 1: Determine your insurance coverage.
Each policy can vary, but from our experience the coverage for debris removal is generally 5% of the replacement cost of the structure (at minimum). Many policies have an additional 5% that can be accessed from two additional insurance coverage categories and utilized for debris removal: 5% for the replacement cost of ‘other structures’ and 5% of personal property replacement. If you choose to opt-in, the specific portion of your insurance allocated for debris removal will be remitted to the State to cover at least a portion of the costs for debris removal that the state covers. We’ve written a previous article strictly on this subject that can be found here.
Step 2: Identify what on your property needs to be removed beyond your structure (i.e. boats, foundations, retaining walls, etc.).
Review your list of items versus the list identifying what is eligible (or ineligible) to be removed by the state if you opt-in: here. Commercial structures are also eligible for opting-in for the Camp Fire cleanup (a notable difference from the Carr Fire opt-in program).
Important: if you have items that are ineligible to be removed under the state-sponsored program (and you wish to opt-in), then you can utilize your insurance coverage for debris removal to remove ineligible items FIRST. The remaining insurance coverage is all that the state will collect for removal of eligible items. This information was obtained from question 22 of the Butte County Recovers frequently asked questions and in our opinion could result in a substantial savings to homeowners if utilized correctly: here.
Step 3: Make an Educated Decision
Now that you have an approximate coverage amount in mind and know what is and isn’t eligible for debris removal, you can make an educated decision. We participated in many cleanups from the Carr Fire from beginning to end for homeowners who opted out, so we can approximate total costs: the scope of work is identical whether you opt-in or out. It’s just a matter of who is performing the work on your behalf. The scope of work for the debris removal and property clean-up consists of: asbestos survey, preparation of a work plan for debris removal, debris removal and disposal, soil scraping, soil confirmation sampling, and preparation and submittal of final documentation for approval. We present a few scenarios for insurance coverage below that are based upon our experience and opinions:
- Debris removal insurance coverage of less than $20,000: we recommend you opt-in to the state-sponsored program. The only caveat to that would be if your home was smaller and thus the debris removal cleanup would be significantly less. We are working on attempting to get a per square foot cost for disposal as our numbers from the Carr Fire are somewhat skewed because of the homes destroyed in that fire (the Carr Fire mostly affected the west side of Redding which is also where many of the largest homes in the Redding area are located) – the costs for debris removal from a 4,500 square foot house are obviously much greater than for a 1,500 square foot home.
- Debris removal insurance coverage of $20,000-$50,000: we recommend you obtain a site specific quote from a demolition contractor/environmental consultant team that can give you an all-encompassing cost from beginning to end. These quotes should be obtained sooner than later as they opt-in/opt-out deadline will likely be imposed in the near future and it’s highly unlikely it will be more than 2 months out.
- Debris removal insurance coverage of $50,000 and above: we recommend you opt-out, but still obtain a site-specific quote as noted above to ensure your coverage is sufficient and there are not unforeseen complications.
We expect to work on both the private side of the cleanup as well as the state/federally-funded side. This guide is truly meant to serve as an un-biased tool for local families, businesses, etc. to make educated decisions. Speaking of bias, in my opinion you will see bias from both sides of the decision to opt-in or opt-out and it’s important to keep that in mind when making your decision.
State and local governments likely wish for as many property owners to opt-in as possible, since it makes the management of the debris removal cleanup process significantly easier. Large contracts are being issued to environmental contractors who will largely manage the testing, debris removal and documentation process for the state and local governments. This is completely understandable. I witnessed firsthand the difficulty for short staffed local environmental/building departments to try and manage a huge surge in workload that results from these catastrophes and having to not only coordinate with the state officials, but also individual property owners who elect to opt-out.
On the flip side of that argument, local contractors would likely like to see as many homeowners opt-out as possible so that they could work one on one with clients in a typical manner and not have to work through the bureaucracy of being a sub-consultant (at best) to a huge contracting firm. Again, I believe this is understandable in terms of someone needs to perform the work and if the work can be done by local contractors as much as possible, then at least the money stays locally.
The deadline to opt-in or opt-out of the debris removal program for the Camp Fire is January 31st, 2019 at 5:00pm.
We sincerely hope everyone is beginning to recover from this disaster and that the process runs smoothly for each of you from here regardless of whether you opt-in or out.
Please feel free to contact me if you have further questions or need additional information.
Clay Guzi and the Guzi-West team
888-351-8189 x 1; firstname.lastname@example.org