Scales Of Success Podcast

PSA: What to Do After a Wildfire: Expert Advice with Ricky Patel

• Marcus Arredondo

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This episode is a deviation from the regular podcast.  Serving more as a Public Service Announcement, in this unedited and raw episode, host Marcus Arredondo discusses recovery strategies with legal expert Ricky Patel. From dealing with insurance claims to understanding renter and homeowner rights, Ricky’s insights shed light on navigating the aftermath of natural disasters. Learn about the importance of speed in filing claims, working with adjusters, and securing living arrangements.

Discover how Ricky’s extensive experience—including leading the largest class action lawsuit in U.S. history against British Petroleum—shapes his advice. Gain actionable tips to rebuild, protect your rights, and prepare for the future in the wake of the recent California wildfire.

Ricky Patel has represented high-profile cases, including Hurricane Maria relief efforts in Puerto Rico and the 2010 BP oil spill. His expertise in disaster recovery law has been featured on CNN, 60 Minutes, and more.

Reach out:
Email: ricky@rkpventures.com

Episode Highlights:
(0:00) Introduction
(03:17) The role of federal, state, and private sectors post-disaster
(12:00) Filing insurance claims: First steps and documentation tips
(18:49) Adjusters, attorneys, and navigating the claims process
(28:22) Renters vs. homeowners: Rights and protections explained
(31:06) Legal processes, solvency concerns, and underinsurance challenges
(38:30) Actionable advice for wildfire victims

______
Kindly check the transcript here:
https://scalesofsuccesspodcast.notion.site/transcript-what-to-do-after-a-wildfire?pvs=4

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Note: This transcript was automatically transcribed by Riverside.

Marcus (00:01) All right. Well, welcome everybody. We're going to deviate from the norm from our typical podcast setup. This is more of a public service announcement for primarily for Southern California people. For those who don't know, which would be crazy, but 10 days ago, today's January 17th, 10 days ago, there was a wildfire that spread and it's devastated a number of people locally, either directly or indirectly.

And as the fog starts to lift, I wanted to bring Ricky Patel on who has an extensive background. I'll get into it in a second. To help us start to figure out what the next steps are, what we don't know, how to navigate this. I know there's a tremendous amount of overwhelm for a number of people. So this is intended to be short to the point, nothing but substance. I'll give a quick intro.

on Ricky and then we'll just start to dive in. So, before I give Ricky a chance to say hello, some background on him, his background is extensive. The resume, is w could, could fill a podcast by itself, but, among many things he's served on, Barack Obama's national finance committee as an ambassador for the Clinton global initiative. He's been featured on 60 minutes, CNN, ESPN, Fox, ABC, NBC, a number of other places, but most importantly,

He, there are two points I wanted to bring up. One was he led the largest class action lawsuit in US history against British petroleum following the 2010 BP oil spill. And number two, also represented the Puerto Rican government and its private citizens following Hurricane Maria in 2017, protecting more than a billion dollars worth of property and helped to create law to protect Puerto Rico's people against the insurance industry. So a lot of relevant information here, Ricky.

Welcome, thank you for being on.

Ricky Patel (01:49) Marcus, thank you so much for having me. I wish that it was under better circumstances. This is absolutely devastating for the people, but thank you for having me on here.

Marcus (01:55) I know. I know.

Well, I'm looking forward to having this conversation. Obviously it's not under the great auspices, but to set the table for the listeners and viewers, I intend to sort of walk us through a macro level understanding what we don't know, talk about those who were impacted, what they should be doing as next steps, then talk about maybe the challenges that they may encounter and what the legal timeline and processes might look like into the future. So.

Ricky Patel (02:03) Thank

Marcus (02:29) For the benefit of the audience, I'm going to try and incorporate everybody who's been impacted, bifurcating that into sort of two categories, those who've been directly impacted and those who've been indirectly impacted. The directly impacted, I would categorize as those who've lost their homes and everything in it, unfortunately, and those who have kept their homes but are not granted access and may not be granted access for the foreseeable future, certainly as hazardous materials start to get...

So I want that to be a through line throughout the conversation. So without more clarification, I'll throw it to you, Ricky, starting out. Help us understand through this level of natural disaster, what is going on behind the scenes relative to the insurance industry and the government.

Ricky Patel (03:17) Yeah, so there's a lot of things going on. So look at this as if there's three main parties. The first one is the federal government, the second one is the state, and then you have private. So private is your insurance companies and so forth. And what they're looking at is, at this stage, number one, no one has a clue what the damages are. All the estimates that are going out, there are people just basing it on what they believe the damages are. But this could take months, if not years for them to be able to figure out. So first what's happening is there are

The main purpose of what the federal government is going to look at is how do we make sure that those who are no longer within their houses have somewhere to stay, food and the bare necessities. The state is looking at how do we confine the fire and how do we make sure that all of the entities that are supposed to be doing what they're doing are doing that. That means all of the firefighters.

off the agencies to make sure that emergency services are in place, the insurance commissioner and so forth. And then you have the insurance companies. The insurance companies are looking at this more with a business eyesight. And they're trying to determine what are their damages, how are they going to be able to cover it, and does this reflect what their risk analysis was from the prior year? So all of them are looking at it in that scope. So the federal government

Just so you understand, a lot of people throw around turns to FEMA, for example. We worked with FEMA in Puerto Rico after Hurricane Maria.

Hurricanes and wildfires, although they're natural disasters, the colossal damage that we've seen from this fire compared to the hurricane is slightly different. Even with 200 mile per hour winds, you didn't completely flatten and destroy everything in the way. Do see what saying? You had families that went through their houses where the roofs flew off and burnt those damaged.

maybe walls and so forth, but you may be able to find your photo album, you may be able to find your child's crib or their clothing and so forth. What we've witnessed here is absolute full destruction. So how does that play into this? When FEMA usually comes in, they're usually, when you don't have insurance, when you have no other protections in place, they're the ones that come in and have the backstop. Now,

The issue with the location of the fires, as you know, Marcus, this is probably some of the most expensive real estate in America. So when you're saying that there's $40,000 allocated from FEMA, maybe 42 now, that's if your insurance and other agencies don't cover it, correct? Number two is for those individuals that insure their properties, they may not have taken pictures of the inside of their properties to see what type of furniture they had.

artifacts and all these other things. If there's a hurricane, you can show, for example, in Puerto Rico, we were able to end in South Florida. Whenever these hurricanes go through, we're able to show here's pictures of the shoes that were destroyed, the clothes that were destroyed, the furniture that was destroyed, right? Here you're looking at ash. That is going to play into the favor of the insurance company, unless a lot of this stuff was

accurately documented. Now, what does documentation look like? Documentation could be a Facebook picture. know, Marcus, if you're inside of the family, you're in your grandmother's house, there's a nice family picture. If that's all you have left, you're gonna have to pull, you know, items that you can look from in there. The best case scenario is when families actually go through after getting their insurance and they take pictures throughout their property and they preserve. This is always something that we recommend, especially when getting insurance.

After that, you have your insurance company. Now, a lot of the carriers in this area were not even covering FIRE. So you have to go with the FAIR plan, which Mark, I know you wanted to discuss a little bit about that. Do you want me to jump into that right now or should we get... Yeah. So number one, I'm not a California licensed attorney. I want to make that fundamentally clear, but I'm going to compare FAIR to other mechanisms that are in place in different areas.

Marcus (07:37) Please, please, yeah, keep going.

Ricky Patel (07:49) especially in Puerto Rico after Hurricane Maria, what happened was the insurance commissioner tells all of these insurance groups, okay, so let's say insurance A, B, C, D, and E, okay, and these are the equivalents of the state farms, all states and so forth. The insurance commissioner, number one, has to make sure that there's solvency so that they're able to pay out in case of a disaster. But then there's a backstop on that. And what that means is that they go ahead and they ask all of these individuals

that are opting in to providing insurance within these areas to go ahead and create these groups. So in California, it's called FAIRS. And that means that if for some reason they offer these packages, if there's no insurance offered on this fire package, this is the bare basics. This is the spare airlines, okay? It will get you to where you need to go, okay? So it's like a bare minimum, but you're not going to get all of the bells and whistles that you traditionally get with your insurance policy. So with FAIRS,

you're going to go ahead and get your fire insurance. Now, even though there are wildfires in California, I don't know if they've calculated the magnitude of what just happened here. And we still don't know what that's going to look like. So let's go through the situations of this. Number one, if you have purchased through FAIR, you need to apply for your coverage now. This is one of those games that the last one in

they may be waiting years to get paid. So the quicker that you can go, the quicker you can file your claims on both your private insurance, fair, and any other policies that you have, you should be filing that right now. And I know that sucks to hear it because it's like, you're still going through this morning phase of, just lost everything. How do I tell my family? Where do I put them? Where do we get food and clothing for them? And so I'm not meaning to sound desensitive about this, but...

Marcus (09:33) Right.

Ricky Patel (09:43) It's coming from a place of stating that if you don't put yourself in line right now, this process can take a significant, absolutely, absolutely more than you can imagine right now. So, so anyway, this group of representatives from these insurance companies, they have the fiduciary duty to make sure that if for some reason, their collective amount does not cover the damages, they may be responsible with their own insurance agencies to go ahead and fill that.

Marcus (09:48) Speed matters. Yeah.

Ricky Patel (10:13) pop back up. Okay. I have a feeling and we can check back on this in months to come or a year or so. I have a feeling that you're going to have to go for almost a bailout for this one. This one's going to be so significant that the insurance companies are going to struggle to be able to take care of their losses in addition to providing fare with everything that they need. So I do think that the California government is going to and the Department of Insurance is going to have to intervene.

at some point, or I could be wrong and they cover it. So what happens with fair also is everyone else that has this insurance policy, it's going to go up. They increase all the policies around to make sure to cover it. so whether your property was impacted or not, you are going to see some impact off this going forward. So I know I threw a lot at you Marcus.

Marcus (11:04) Well,

no, that, so I wanna address sort of the shortfall in many people's insurance coverage among those in those areas, but you mentioned speed. So what's the first thing, mean, where should they be going to find this information? Is it digital? I mean, I'm trying to think practically what is the first step besides calling their insurance agent, which by the way, I've heard stories about calling.

And this is not any disrespect to any insurance agent out there. There's disparities among them, but many insurance agents don't even know what the next step is. And, I actually just heard a story about someone finding out that state farm or another insurance company had a booth at home Depot and he found out more information from what was provided at the home Depot than his own, insurance agent. So how do people best protect themselves and what's the next step? Like,

You know, you can't rely on information without being proactive.

Ricky Patel (12:00) Yeah.

Yeah, that's a scary side of this. Typically, let's say that your kitchen burned down because of a fire with a stove. You're going to have insurance agents. You're going to have all these people at your beck and call to help you out. When an incident happens like this, what happens is people are scrambling, number one. So you have a lack of adjusters. have a lack of all these tools that you typically would have are now like

Instead of one person to one person, you have one person to maybe three, 400 people. So you're going to go to the website, number one, for your insurance carrier. Okay. They will have information on their own how to file your claim. If you do have your documentation. So this is referred to as a binder in the binder. It will have step-by-step also of where you need to go. It will have information for your agent. If your agent isn't able to provide you with any further information from there, the website go on there and you have your policy number.

Marcus (12:29) Mm-hmm.

Ricky Patel (12:52) You want to make sure that you are applying immediately for it. That means that the moment that you're in there, you'll have a claim number. That claim number is the equivalent of your waiting in inline. the quicker you can get your claim number, you can get back to trying to figure everything else out, but you have a space there. Once that happens, they're going to go ahead and assign you an adjuster. The adjuster's goal is to go ahead and determine what are your losses? Was the damage caused?

by this incident that we're discussing. And this is something that Marcus, if we forget to get to it, please remind me, because I think this is really important, because this is where oftentimes people end up getting denied on their claim, okay? So this is a part when they're looking at what was the damage actually caused by, all right? Number three is the evidence of loss. So if you're stating, listen, I had a restoration couch, restoration hardware couch, and I had...

you know, this design a lap and that they're not just going to take your word for it. You're to have to have receipts. You're going to have to have images. You're going to have to a lot of stuff that shows that you still have those items. How old were those items? They're going to try to appreciate those items, right?

Marcus (14:03) What would you say to the people that don't have that stuff? How can they best arm themselves?

Ricky Patel (14:07) Yeah,

yeah, so I would still go ahead and file for it. What I would do is I would try and find out the place where they purchased it from, see if they have a copy of the receipt. I would try call their credit card company, see if they have a copy of the receipt. Now, you know, after so many years, it's a little difficult to try and get that information. But if you're able to, let me give you an example. Let's say you purchase your room set from Rooms2Go, okay, and you're able to call Rooms2Go. They may actually have that information. That's enough for you to get through the door.

The difficulty off this is going to be, Marcus, you've been given this beautiful house and all of this furniture and everything that's been passed on from your grandparents to your parents to you now. Okay. When that stuff is destroyed, if you don't have any pictures or any information from there, you can still make the argument that there was losses, but it's very rare that insurance companies are going to cover that. And if they do cover it, they're going to depreciate it so much that you're not going to be able to even purchase a used piece of furniture for that.

Marcus (15:06) So this is primarily addressing, which I want to stick with, those who have lost sort of everything, right? If not in totality, a majority of what they've had. know, insurance companies are going to come down and try and nickel and dime. I would imagine maybe I'm being, let's just assume the worst in this category. How can people best arm themselves to protect themselves? Do they hire their own adjuster? Is there a market for an outside adjuster? How does that process work? I know that there's some,

Ricky Patel (15:09) Right.

Marcus (15:36) different avenues that I'm interested in sharing with the audience.

Ricky Patel (15:41) Yeah, that's a great point. So you can go ahead and hire one of two things. You can hire a public adjuster. OK. And there are plenty of public adjusters in California. And if you decide not to go to public adjuster, you can go with an attorney. So attorneys typically work on contingency fee. What that means is that they don't get paid until you do. But they take a portion of whatever your damages are. So if you were to get $100 is the total.

To repair your property if you have to pay $30 out to the attorney make sure Before you sign up with any of this stuff or accepting you stuff that you understand Hey, do you have enough to cover the repairs to your property? These are things I want you to really think up before hiring an attorney Think about what they're asking you and tell yourself. Okay, I need $80 bare minimum in order to repair my property. Okay. All right

What does that equal out to? What is the gross amount? What is the total amount that you need when you hire an attorney or with a public adjuster also public adjusters also do on contingency. The reason for these contingency fees are to prevent people from having to add, you know, insult injury, you know, for having to continue to now pay out of pocket. So in addition to paying your mortgage, in addition to paying your insurance, remember none of this stuff stops. And I think that this is very important to discuss also, right? Just because your property burned down.

does not mean that your mortgage is gone because the property is gone. This is a sad reality of this. So one of things that you also want to do in addition to filing your insurance claim right away is if you do have a mortgage, go to whoever's servicing that mortgage, find out if they can at least provide you with some type of forbearance or some type of relief. Now, that doesn't mean that your payments are being made by someone else. What that means is that they're giving you some time.

to start paying, but that just means the interest is being tacked on on the back end. But if you need that in order so that you don't default on it, that's gonna be important. Even your property taxes, Marcus, I'm sure a lot of people are concerned about property taxes over there. your property taxes aren't gone just because your property is. How it typically works is it's a pro rata. So let's say that

half of your house was destroyed, okay? There's provisions in place that will remediate the cost and reduce down the amount that you owe on that part, but not the land. And my understanding is in California, about two thirds of your property tax is that land value. So you're still paying your property taxes on a property that may have damaged or completely destroyed property out there.

Marcus (18:18) Mm-hmm.

Ricky Patel (18:27) So these are things I want people to start thinking about where they're actively looking for solutions. Place it out there, get your claims in there, go speak with your mortgage servicer, not the bank. The banks have nothing to do with this. It's the actual service of your mortgage. Speak with them, see if there's some type of forbearance, at least temporary, while you can get your arms around what's happening here.

Marcus (18:49) So as it relates to hiring an adjuster or an attorney, what are some questions that should be utilized by those who are seeking them to best protect themselves?

Ricky Patel (18:58) Yeah, yeah, great question. So number one is experience. You're the sad thing about situations like this. Whenever there's a disaster is you have every single person that has a law degree or a license to do contractual work on properties that comes out there and hires a marketing team and place themselves out to be an expert. Find out about them. How long have they been working on property damage cases? Not personal injury, but property damage cases.

Number two, what has their success rate been? Number three, what is their contingency percentage? Okay. Number four, when they apply for an amount. So for example, if you're applying for a hundred dollars in damages, what do they usually negotiate that down to? Does it usually work out to $75? Does it work out to $50? What is that number? That way psychologically, you can be prepared to say, I'm hiring this law firm that's been around for 30, 40 years.

They've worked on thousands of property damage cases. They've worked on wildfire cases. They have the funding. This is super important, Some law firms will get involved in this and later on realize they cannot afford to pay for the experts and everyone else. So they fit off more than they can chew. Okay. They sign up three, 400 of these cases and now they have to hire experts. Insurance companies are not going to pay the full amount unless you're able to show them, you know, expert statements that show

This is the cost to rebuild today. Here's the price per square foot today. Okay. In this area now, because everyone is building, what are the costs of permit? What are the costs of labor? You know, all of these rules and regulations, what is that cost? You're to need experts to come in and put that together. Now, if the law firm that you hire or the public adjusters that you're hiring, they are not able to fund this properly. Even though it's a contingency case, you may be now sitting in the back.

Marcus (20:33) Mm-hmm.

Ricky Patel (20:52) because the attorneys have not been able to do the work. So you have a claim number, you've done everything right on your part, but the law firm may not be able to. So make sure that they have the funding. Ask them difficult questions. Don't be afraid of them. Remember, they work for you. Do you have the funding? Do you have the experience? How long have you done this? What's the average time to get paid out? And number five, this is the one thing that most people, most attorneys will not want you to hear.

Marcus (20:56) Mm-hmm.

Ricky Patel (21:19) make sure that you're never forced to take a quick settle. Okay? What that means is if they come back and they're like, look, I know you're asking for a hundred dollars, but we've got $50 on the table. It's a good offer. If that offer does not make sense, do not take it. Do not take it because you're going to be the only one there holding that net amount and it may not be able to get done what you need. And the attorney is going to go on to work on the other three, four, 500 files.

Make sure 100 % before you get started that you write on a piece of paper. No matter what, I cannot accept anything less than this number.

Marcus (21:54) So on that note, you, know, this is sort of what I expect. well, actually, before we get to that, you mentioned something about what caused the damage. mean, identifying what the cause is seems like, I can't imagine that surfacing with any validity for months, if not years. How does that play into this process? I mean, will that ultimately delay claims getting paid out? How, you know, and I know that there's sort of sequences of the claims getting paid out, right? So there's.

sort of housing room and board that needs to get paid out, but then as it relates to property and land, mean, and the, personal possessions, you know, that type of thing starts to get sequenced. How do people start planning their lives? I mean, can you speak to, I just dumped a lot of questions on you, but can you speak to that?

Ricky Patel (22:38) Yeah, no, no, no.

All very good questions. So let me clarify the first meaning of the damage protocol. So let's say that you're one of, if your house is completely destroyed from the fire, this argument isn't as relevant to you. You can put a check mark on there that they're not going to argue what caused this damage. Okay. The only reason that they would do that is if every house around you was fine and your house was the only one that burned down, they may ask some questions, right?

Marcus (23:03) Well,

just real quick on that point. Is there any difference between if it gets identified as arson versus a natural wildfire? mean, that's really the curiosity.

Ricky Patel (23:12) Yeah, yeah, yeah, yeah, yeah. And there

are exceptions. If it's arson, it's a criminal act, and there's criminal act exclusions in insurance policies. I'm guessing that the insurance commissioner may hold, no pun intended, may hold the feet to the fire for these insurance companies to make sure that they are not using the one instance of arson, right? If I were to argue on the other side, I would state that the arson may have caused

the damage to the place where the fire was set. However, the collateral damage of the wind blowing were part of the natural disaster. That's the argument I would make. However, insurance companies are going to make the arguments they make. But I know there's a lot of people asking that same question. So thank you for asking that. What I'm referring to is for the person whose house wasn't completely destroyed. OK, so let's go through this. They have fire damage around the outside perimeter of their property. Maybe their cars are damaged.

singles and you know, some of the aesthetics. Let's say they have a hundred thousand dollars in damages to the property. Those are the ones where the insurance company will later on come in and say, okay, was this damage actually from the fire or was this damage from something else? Do you see what I'm saying? You know, whenever you have an earthquake or something else and you have things broken all inside of the house. Okay.

Marcus (24:28) Mm-hmm.

Ricky Patel (24:36) Was it from the shaking of the earthquake that caused the damage or were some of these things broken before? And so now you have to make sure that you're able to substantiate and show no. Here's actually a picture two days before when I was washing my car outside, was beautiful weather and you can see that there wasn't. So you need to be prepared that they will ask you these questions regarding whether this is a pre-existing damage, okay? Something that happened this

Marcus (24:43) Mm-hmm.

Mm-hmm.

Ricky Patel (25:06) And one of the issues that some of these people have is if you've had any type of damage from anything that's happened prior to this, water leaks, other damages and so forth, they're going to look at this and try to bifurcate and say, hey, well, we're not going to cover the whole loss of this because this seems like it was caused by something else that will try to cover this. So it's very important that people are aware of this prior to going into filing their claim and making sure that they have a list.

Okay, here's how I know that this was caused by this. And by the way, one of the questions that you embedded into the last question was people trying to figure out where they're gonna live and so forth. In your policy, that's what's called an ALE, okay? So the ALE is the additional living expenses. And that provision allows for you to go ahead and get a hotel, an Airbnb, or some type of accommodation while you're trying to figure out what is happening to your property, especially if the property is uninhabitable.

Marcus (25:36) Hehe.

Ricky Patel (26:05) So you want to make sure, look in your policy, look in your deck. If you're an insurance agent, really your insurance agent should be the person that you go to for it. And this is a great lesson to find out if the person that you have purchased your insurance from, find out how much they really know, because this is the time when you really need them, not just the quoting you. Okay. But anyways, they should be able to guide you to what your limits are on ALE. ALE will cover, you know, a certain amount of money. let's say you need six months, eight months, 10 months, whatever it is.

Marcus (26:22) Mm-hmm.

Ricky Patel (26:34) for your house to be rebuilt, fixed, or just temporary housing, you'll be able to go in there. And another issue that's going to arise is I think in California, you're only allowed to increase your rent by 10 % to avoid price gouging. Is that correct, I think like 10 % for rental, right? Yeah. Yeah.

Marcus (26:52) There's a lot of contention going on right now. That's not clear to me what that is, there

have been evidence of some price gouging and there's been some response from the government, but I don't know where that's landed as of today.

Ricky Patel (27:00) Yeah, right.

Yes, it's typically whenever there's a disaster like this, like you can increase your price by 10%. So let's say that you have a company that rents out property every single year for $100 a month. You can go up to $110 and you won't meet the threshold of what is considered price gouging. Here's the issue is a lot of people who are not renting a house or who have taken the properties off the market, when they decide to go ahead and put it on the market now, there's no limit to it.

Marcus (27:26) Yeah, there's no baseline.

Ricky Patel (27:26) That's not considered price

gouging yet because now it's market value and market value is permitted. So when people are looking for these types of things, I don't want them to freak out thinking, oh my gosh, how am going to pay for this? I want them to first go and look at their ALE and apply. You have to apply for your ALE. Okay. So make sure your insurance agent says, Hey, I need ALE. I need immediate funds. It could be ALE or loss of use coverage. One of those two.

will be the verbiage that you'll find in your policy. Use that immediately.

Marcus (27:59) about you addressing the rental market? I'm curious, what do renters who've been displaced by this and, and look, you know, many people who have homes that are still there, or renters who have homes that weren't burnt down, can't go back even though they're standing and what have you because of the hazardous material. There's also implications in the in the water lines now. What what protections do they have? What action can they take to sort of help?

Ricky Patel (28:22) Mm-hmm.

Marcus (28:28) protect themselves and what is their lifestyle like? Assuming that they had renters insurance, if they're out of that, I'm assuming they're SOL.

Ricky Patel (28:35) Yeah,

so rents are in a slightly better situation than owners. Okay, let me explain why. If the property was destroyed, then typically these leases are null and void. Okay, the property's market is uninhabitable and they're no longer responsible for paying the rent on these properties. And obviously check your lease, make sure that there's no specific provisions

against that. This is what the standard is. So if the property is completely destroyed, unlike if you have a house with a mortgage, even if you don't have a mortgage, I mean, you still have to pay insurance, property tax, and all these other things. If you're a renter, the one thing that you do have is that it's not like you're bound now to pay the next few years worth of rent on this property in addition to looking for something else. Renters insurance actually has a alienate also.

Marcus (29:13) Mm-hmm.

Ricky Patel (29:30) So the good thing is that they can now find, if they have renters insurance, like you say before Marcus, if they do have that, they can use the ALE or the loss of use and go and find similarly situated apartment or condo or house, whatever it may be, go and get situated. They do need to follow the same things with the renters insurance. So taking pictures, making sure that they have, you know, some type of itemization of products that they had in there so they can go ahead and file that as swiftly as possible also.

Marcus (29:59) Okay, that's helpful. So I want to move on to sort of a little bit more in the weeds relative to the legal process, what that looks like. And if you can give us some general outline as it relates to, you know, what are the most likely obstructions that people are going to find as they navigate this? is this starting to look like an eligible class action lawsuit? I mean, I think it's probably too early. We're going to have to see how insurance

Ricky Patel (30:05) .

Marcus (30:27) carriers respond to this and how the government

gets involved. But I don't know what I don't know here. So I'm just curious, what's your take on what should people start to arm themselves? Because maybe I'm wrong, but I just fully expect this to be a full on fight between residents and insurance carriers. And I think people are gonna be passing the buck. No one's gonna wanna carry.

Ricky Patel (30:33) Yeah.

Marcus (30:52) the load on this and this is going to be a huge drain on the insurance system. I'm actually curious if you have any comments on solvency, you know, are any of these insurance carriers subject to, you know, the reinsurance program? We saw what happened with AIG years ago. You know, are we in some sort of state of peril there? So again, I just dumped a lot on you, but I want you to pick and choose what you think is most relevant.

Ricky Patel (31:06) Mm-hmm.

Yeah. Yeah.

Yeah, no, all good questions. So I want you to look at this similar to Hurricane Katrina. OK? If you look at those, this is not a hurricane that impacted a small area where they're just going to build back up. I this is catastrophic. And it hasn't ended. It still hasn't ended. They're still trying to get their arms around what's happening here. Solvency is a big concern.

Marcus (31:35) Right. Right.

Ricky Patel (31:43) I don't think that these insurance companies are going to go bankrupt. I think that you have a new president that's coming in in a few days and he definitely doesn't want to start his term by allowing somebody's conglomerates to start going bankrupt. So I think that there will be some type of bailout. What does that mean for the people though, right? Because the people who are listening to this.

podcast are not owners of major insurance companies. They're the ones who have been impacted. And I hate to give information and seem like a downer, but this is something that's going to take a long time. It really is. This is going to take a long time. So the way how it typically works is whenever you file your claim, there's usually around 40 days where the insurance company provides you with some type of ads or whether that's an

acceptance of liability or that they deny it. That's a causation argument there. If they go ahead and do that and they say, hey, listen, we accept your coverage, they're also going to look at, did you have the adequate amount of insurance? This is another one where they try and get out. So Marcus has this beautiful mansion and he insured it five years ago. The mansion back then was $5 million and today it's $9 million.

and no one in his team ever decided to update the insurance. The insurance agent didn't do anything else and you've been paying for $5 million worth of insurance on it. The sad part about it is if there is catastrophic damage, it's not that they just say, okay, hey, you didn't cover the whole nine, so we'll just give you the five. There's actually policy provisions in there that can prevent them from paying you anything by stating that you under covered your insurance, okay? And that's a tricky one too. Now you have to argue.

Marcus (33:13) Mm-hmm.

Ricky Patel (33:33) that was not done nefariously and bad faith and so forth. So let's make sure always that whenever you have insurance, speak with your agent. Do I have adequate insurance on here? Get it in writing, get it in the email. Hey, I just want to make sure that I have the right amount of insurance. There's nothing worse than coming back and your insurance agent says that you told me it was worth this much, okay?

Marcus (33:54) Well,

I wanna pick on that. I'll come back to it I keep going, but I do wanna come back to this.

Ricky Patel (33:57) Yeah,

yeah, no problem at all. And when we're doing that also, Marcus, remind me to talk about your tax prop 13, because this is also important for rebuilding and so forth. So when you're going into...

my gosh, you had three questions in there. I'm trying to think of what the, the, the last one was.

Marcus (34:24) Well, let's just actually jump to the under insurance because that's super relevant. cause there's a number of people as you're aware in California, but certainly in this area in particular, an increasing number of insurance carriers were pulling out. And as a result, mean, there, there are people here who built homes, but there's also people who've been here for three or four generations and they've, they've inherited it. And it's to bring up prop 13 as well. They, you know, they're at a very, very different basis. in many cases they were either underinsured or not insured at all.

Ricky Patel (34:26) Okay, sure, yeah, okay.

Mm-hmm.

Thanks

And.

Marcus (34:55) I hate to say that they're completely out of luck. They're obviously facing an uphill battle. What can they do to the underinsured people specifically? What can they do to protect themselves? How can they try and fight this battle? If you know, it's got to be worth it to some degree. I mean, there's no, you're fighting for your house in your home and what you've lived all those memories. I mean, you want to be back there. What can they do?

Ricky Patel (35:15) Yeah.

Yeah, the key is going to be speed once again. The faster you can get in there, it's going to be one of those things that the more money that's in there, the quicker they're going to try to resolve things. But as that starts dwindling down, they're going to start being more specific. And then the tail end off it, it's just litigation. That just means let's just delay, deny, and defend those matters that are coming out in tail end of it. Right? So at this stage, they have to file right away. Number two is they have to go ahead and make the argument.

that whatever they were paying in for their insurance, that there was no one, and this is once again, their argument is they have to show that no one had asked them to renew an appraisal or have anyone from their insurance company come out there and look and say, hey, by the way, I know we're insuring this much, but really your insurance should cost this much. You really do need to insure this much and show almost that their agent didn't.

helps them to get to where they should have been with that. That's as creative of an argument as they're going to have.

Marcus (36:20) Mm-hmm, right.

Okay, that's helpful. the other question that you might have been going after was the class action lawsuit potential. Is there one?

Ricky Patel (36:26) Mm-hmm.

Yeah, yeah, so

the class, no, I don't see a class action at this stage, OK? A class action. So number one, let me explain what class actions are. actions are mechanisms that are created to prevent one individual from having to file a lawsuit against one defendant when we know it's like a David versus Goliath type of argument. If that individual that is the defendant has caused the same or similar type of damages,

to more than two people. And the Supreme Court has been very murky on defining how many people you need in order to serve by class. But let's say two people to be safe, okay? For more than two people. So let's say there's thousand people that suffered from this company. For example, the oil spill, okay? Well, the disaster from the oil spill impacted hundreds of thousands of people. And it was the same defendant. Instead of each of them individually filing lawsuits and clogging up the dock of the courts, the courts have said, let's go ahead.

and combine all of these, it'll be more cost efficient for their attorneys, for the clients, and so forth. And the defendant can go ahead and settle in one go and make sure that they don't have to individually litigate, which could take 20, 30, 40, 50 years, right? It's so early that I can't see where a class action as of today would happen. Now, if we're going down a year or two years down the line and we realize that there were, you know,

For example, electric companies, not like the electric company fire that happened before, okay? And you're looking at it you're like, all right, well, listen, this company had a duty to prevent this from happening and they didn't and it caused the damages. And all of us as defendants have that. Here, it was either this individual that set the fire or it was something else that caused it. It's gonna be very difficult to pin it to that. Now, if the insurance companies deny the cases,

Even if they deny the cases, it's going be very difficult to have a class action against them because everyone's damages are going to be slightly different. You see what I'm saying?

Marcus (38:30) Mm-hmm.

Yeah. Well, I think there's a hundred more questions I could go through, but I think this was a nice sampling, at least at the tip of the iceberg. Anything you think I missed? You know, if you were in these shoes right now, what would you be focused on?

Ricky Patel (38:35) Yeah.

Yes, so I think our theme of this has been speed, right? So number one, immediately go call your agent first. If your agent can help you out, that's the best case. And I'm sure your agents are also getting bombarded by everyone. However, get your policy in, get your claim number, write your claim number and when you've got that in there and make sure to make a note that within five days an insurance adjuster should contact you.

If they haven't, bombard them, call them, it's fine. Give them a little bit of time to get back to you, but that's roughly the time. Gather your pictures, information, and data as much as possible, almost like you're preparing a case. Prepare as much information as possible and prepare for them to ask you as many questions as possible regarding the damages, where the items are, where the items were from. Number three, get ALE. And what that means is...

You want to make sure that they're giving you the cost in your policy that allows you to get additional living expenses. And that can also cover, by the way, groceries and other items. Okay? Not just moving expenses. It can cover a lot of other items, temporary clothing and so forth, whatever you need there. So apply for all of those. Get those in right away. If you're a renter and you no longer have your place, make sure to review over your contract. Make sure you're not responsible for anything there. If you have a house with a mortgage on it,

Call the mortgage servicer, ask them for forbearance, at least so you have a little time to breathe from there. And especially if you're dealing with fair, call them up right away because that's the one that I'm most concerned about. I think that they can have a lot of problems with this.

Marcus (40:23) Yeah. Thank you, man. Really appreciate it. If people want to get ahold of you, what's the best way to do that?

Ricky Patel (40:29) Yeah, they can shoot me an email at ricky@rkpventures.com and Marcus, maybe you can share that link.

Marcus (40:36) We'll include that. Yeah,

we'll include that in the notes. Thank you, man. I wish you were on under different auspices, but this has been very helpful and I hope it at least shed some light to more people. So thank you, man.

Ricky Patel (40:40) Get.

Thank you. Thank you for doing this.