Silver Oak Winery Wins Settlement After Dual Wildfires

Silver Oak Winery was in the midst of one wildfire claim when it was hit by another destructive fire. Still struggling with resolving the first claim, the owners of the famed winery sought assistance in preparing their property damage, business interruption and extra expense claims when the second wildfire destroyed multiple buildings on their historic, rural property. They engaged the services of Adjusters International to review their first claim and to prepare and negotiate the second.

• Several years in, the initial claim had still not been resolved. The insurance carrier had made an offer, but the winery managers knew that it did not represent fair compensation for their losses.
• The winery’s remote location added to rebuild costs: the rural, unpaved road made access more difficult—and therefore costly. Builders typically add a surcharge for difficult-to-reach properties. The insurance carrier’s calculations were based on a more accessible location.
• Demand surge* added to rebuild costs: a large number of both commercial and residential buildings were destroyed in the wildfire. Labor and material prices rose significantly, due to the high demand; costs not represented in the insurance carrier’s initial offer.
• Destroyed buildings on the Silver Oak property were of unique, historic construction: all of the structures that were destroyed on the Silver Oak property were constructed with materials and methods that are no longer commonly used or widely available. The insurance adjuster used functional replacement cost for their offer, which resulted in a significant difference from true replacement cost. The barn, in particular, became a sticking point. The carrier’s functional replacement offer included costs for a modern, prefabricated barn; while the original had been a structure common to rural architecture and building of the era— hand-framed in native, true-dimensional, old growth redwood lumber.

*Demand surge is “the increase in the cost of repair or replacement of damaged property that may occur following a large-scale disaster when many individuals and organizations vie for a limited supply of labor and materials needed for repairs.” (International Risk Management Institute, Inc [IRMI])

• The first thing that the Adjusters International team discovered was that the carrier’s adjuster had never actually seen the damage in person. The Adjusters International team provided photographs with supporting documentation to the adjuster. This collaborative, data-driven approach allowed the Adjusters International team to negotiate settlement figures that were dramatically higher than the insurance carrier’s initial offer on the first loss.
• By vociferously arguing that rebuilding costs should reflect the site’s limited access on a rural unpaved road, the Adjusters International team convinced a reluctant insurer to significantly increase the settlement figures.
• By providing construction industry documentation that included both demand surge and COVID-19-related costs, the Adjusters International team secured additional funds for the insured to use toward rebuilding.
• Although the insurer had applied heavy depreciation, the Adjusters International team argued that, per the insurance code, only minimal depreciation should be applied. In addition, the team argued for the value of the historical significance of the buildings and the barn.

Each of the above strategies served to compound the settlement figures and brought both claims to conclusion, generating an accurate rebuild settlement amount - a success story for Silver Oak.

The Adjusters International team collected, analyzed, and presented such a comprehensive volume of information to the insurance carrier that the carrier agreed to a global settlement of both claims, enabling Silver Oak to financially recover from both events and build a cutting-edge wine facility – continuing a legacy of creating world-class wines.