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Replacement Cost Coverage – Part 2

Actual Cash Value

While you may have purchased replacement cost coverage, an insurer is not obligated to provide payment of an agreed replacement cost up front.  Settlement will first be paid as actual cash value (“ACV”) at time of loss.  ACV is usually defined as replacement cost less depreciation to equate to value at time of loss.  It may also be determined as market value for personal property, for instance.  However, when expecting the adjustment payment on damage to your property, don’t expect full replacement cost to be paid immediately.  The insurer will first pay only the ACV less any applicable deductible.

 

Time Limits for Replacement Cost

Most property insurance policies contain provisions that limit the time for you to exercise replacement.  Policies invariably provide that the insurer will first pay ACV and then, if replacement is completed within 180 days from date of loss (sometimes date of payment of ACV), you are entitled to make claim for the withheld depreciation amount.  Be careful to comply with time limits or ask for extensions that are usually granted.  And, make sure if costs are greater than the estimated RCV, you advise your insurer or they may resist payment to full replacement cost where it was greater than agreed.

 

Matching Issues

Great controversy exists where building materials are no longer available and replacement cost coverage is provided.  Insurers may take the position that the payment owed is only for areas that are directly damaged.  Consequently, you may find yourself with different colors of roofing materials on adjacent areas of the roof.  Or, you may find the insurer authorizing replacement of one area of siding and painting that area but not all sides to match.  You may suffer damages to flooring that is continuous throughout the home and have the insurer take the position that replacement cost does not include replacement of other adjacent areas simply to match finish.  Florida, and a number of other states, have dealt with such controversy by adopting legal precedent or changing laws to ensure that matching issues are resolved in favor of the insured.  Generally, circumstances where the property involved would suffer loss of value or appearance because of matching issues, insurers are forced to comply with reasonable matching requirements.  “Line-of-sight” adjustments are common compromises wherein flooring that is continuous and within line-of-sight will be replaced to match even if undamaged.

 

Repair vs. Replacement

Insurers are not liable under a policy to replace damaged property if repair will restore the property to pre-loss condition.  So, if you suffer damages to a roof but the damages are not enough to warrant total replacement, it may be permissible for the insurer to limit claim to the repair costs.  Loss to a kitchen cabinet, for example, may be adjusted on the basis of repair, even where the cost to repair or replace a damaged cabinet may be greater than comparable replacement of a single cabinet and thus avoid replacement of all cabinets.  Insurers have the option under the contract to repair or replace, but once they make that election, they become liable for the full costs.  Accordingly, where you may disagree with the insurer on this issue, require them to invoke their right to repair in writing and hold them to it.  Many policies are now sold with clauses to specifically allow insurers to exercise repair with their own approved contractor.  Ensure that these contractors are held to the same standards as you would require of any contractor under the insurance contract.  And, be aware of building codes that may prohibit repair where, for example, in a High Velocity Wind Zone, roof coverings must be replaced if damages exceed 25% of a section or roof area.

 

Co-Insurance

Most insureds do not have knowledge that allows them to assess the costs to rebuild their property.  Values of insurance are often derived based upon past amount or by formula that are average costs based upon area and finish.  Insurers require insureds to carry insurance to percents of replacement cost in order to recover replacement cost payment; usually to 80% or 90% of the estimated replacement cost.   If an insured fails to purchase adequate limits, they may find themselves underinsured and an unwitting co-insurer.  In effect, the insured will suffer a penalty at time of loss if they are underinsured; not to mention that if a total loss is suffered, the insured will end up paying additional amounts over the policy limits for the full replacement.  It is important for insureds to have knowledge of their property’s replacement value.  Beware, often agents will advise you are only required to purchase certain amounts of coverage.  They are aware that the premium will be less if less coverage is purchased but the insured will suffer the consequence if underinsured.

Replacement Cost Coverage

What is Replacement Cost Coverage?

If you have purchased a homeowners or commercial policy of insurance, you very likely have coverage for replacement cost.  Replacement cost insurance provides that if your property is damaged by an insured peril, you will receive a settlement based upon “like kind and quality” for the full replacement value of the lost property, up to policy limits.  So, if you lose your home or business in a covered hurricane event, for example, you are entitled to the replacement cost of the loss, not to exceed the policy value.

 

What is “Like Kind and Quality?

Simply, comparable replacement using available materials.  So, if your flooring is discontinued, adjustment is based upon materials that are equivalent in value and quality.  Flooring, siding, roofing and many components become discontinued; television and stereo models are evolving constantly.  Replacement cost simply means you may get an unexpected upgrade to your television, if damaged.  Insurers use the terms “like kind and quality” to limit the replacement to whatever is currently available and comparable.

 

What is the benefit of Replacement Cost?

The obvious benefit is that you get “new-for-old”.  If you lose your home in a hurricane, you get new flooring, not previously used; you get a new roof, even if your roof was 10 years old; you get new appliances.  There are caveats, of course.   If your appliances were obsolete and not working, you are not entitled to new appliances.  And, if you do not want to replace the property or items, you lose the benefit of replacement cost, but sometimes, it makes sense not to replace as well.  If you have items you no longer need, or too many, you can always elect just to receive the “value at time of loss” instead of replacement cost.  The choice is yours.

 

What do I need to look out for with Replacement Cost?

There are things to be aware of when your policy provides replacement cost coverage.  In our next series of blogs, we will discuss some of the more common things you need to be informed about:

  • Actual Cash Value versus Replacement Cost
  • Time Limits for Replacement
  • Matching Issues
  • Repair versus Replacement
  • Co-insurance
The Average Public Insurance Adjuster Fees: A Helpful Guide

The Average Public Insurance Adjuster Fees: A Helpful Guide

The losses suffered by Puerto Ricans due to natural disasters in recent years have made the insurance industry hugely important on the Island.

Public adjusters play a significant role in our insurance system. If you’re considering hiring a public adjuster to assist you with a claim, you may well be wondering how much the service is likely to cost.

Read on as we examine public insurance adjuster fees.

What Do Public Insurance Adjusters Do?

Public insurance adjusters are independent professionals that help claimants to settle proceedings with their insurance company.

If you hire a public insurance adjuster, they will take over many aspects of the claims process. They will see to much of the required documentation, and negotiate with the insurance company on your behalf.

Insurance companies provide such an adjuster free of charge. However, because of the obvious benefits of having an adjuster with no connection to the insurance company, many claimants choose to hire a third party adjuster.

Should I Hire a Public Insurance Adjuster?

If you’re making a claim that is complicated or is likely to be contested by the insurance company, a public insurance adjuster might be a wise investment.

insurance companies will do anything they can to deny your claim, or limit its value. Their business model depends on paying out as little in claim money as they can.

Therefore, it is often useful to have someone on your side who knows how to counteract their various tactics. Public insurance adjusters are trained and experienced in this area.

Many claimants feel that the insurance company adjuster does not act with their best interests at heart. In this case, hiring a public insurance adjuster may be the most effective way to secure a fair settlement.

Public Insurance Adjuster Fees: How Much Is the Service Likely to Cost?

Public adjusters often charge commissions rather than fixed fees. This means that, in many cases, public insurance adjusters make no money if your claim isn’t successful.

It also means that the money they make is dependent on the value of their claim. This incentivizes them to get you as good a deal as they possibly can.

They will charge fees in certain circumstances, however. Flat charges may be levied when a claim process is especially long or requires in-depth work.

Fees may also be applicable where the assistance of a third party is required. This will most commonly be a lawyer. Where there is a criminal element to a claim, or a lot of legalistic work to be done in relation to it, the help of an attorney will be required.

The percentage charged as commission is usually between 10-20%.

Making the Most of Your Claim

The benefits of hiring a public insurance adjuster are clear to see. While public insurance adjuster fees might be off-putting initially, it is important to consider the potential cost of not hiring one if your claim becomes difficult.

If you’re thinking about hiring a public insurance adjuster, contact us today for a free consultation.

How Long Does An Insurance Company Have to Settle A Claim?

How Long Does An Insurance Company Have to Settle A Claim?

With tornadoes, floods, storms, and earthquakes causing more residential property damage in American and Puerto Rico than ever before, getting your insurance claim settled in a timely fashion is more important than ever.

Insurers paid out a whopping $1.3 billion in claims last year, a number set to rise in 2020. If you have experienced damage to your home, the last thing you want is to be kept waiting in the dark about when you can expect what is due.

If you’re wondering how long does an insurance company have the settle a claim, read this guide to find out.

How Long Does An Insurance Company Have to Settle a Claim? It Depends on Where You Are.

The first thing worth noting is that the time it takes for an insurance company to settle a claim varies widely from state-to-state. All states have laws that stipulate that every insurance provider must respond to a claim ‘relatively promptly. However, states such as North Carolina do not give a specific time frame.

Others, such as Florida, California, Texas, Ohio, and Georgia, are more strict. In these places, it is mandated by law that a claim must be responded to within 15 days of it being filed.

After this, the time period ranges from between 10 and 60 days for the company to inform you whether or not they will pay the amount requested and begin the transaction process.

Insurance companies in all states also have a right to extend the deadline if they can provide a good reason to, such as a suspicion that a claim might be fraudulent.

Always check the legislation for the state you are filing the claim from before beginning proceedings.

Factors That Can Affect the Time it Takes to Settle a Claim

There are many factors that can affect the time it takes for an insurance claim to be processed. The complexity of the claim is often the biggest factor. Many insurance claims do not appear clear-cut, meaning that the company will often take extra time to investigate to make sure everything adds up.

This is why it is vital to hire a public adjustment handler who can ensure all of your documentation is in order and that the claims process can be as speedy as possible. In addition, if you disagree with a settlement offer or think it unfair, this will naturally add to the time it takes to settle.

If you think an insurance provider is lowballing you with a compensation offer, you have every right to appeal. Using a proper claims adjuster to help you get the amount you deserve almost always leads to a higher offer in the end, so don’t shy away from confrontation.

In addition, there may be a hold-up on the insurance company’s end. Perhaps there had been a major disaster in your area, leading to a lot of claims that must be handled. This is common and often unavoidable.

In this case, you should be patient, but remember that the insurance company should always be honestly communicating with you about the reason for the delay.

Learn More

Now that you know the answer to the question “How long does it take for an insurance company to settle a claim?” you can get started. Make sure to get in touch with our expert team of qualified professionals to find out more about how you can get your claim settled as quickly and conveniently as possible.

Should I Hire a Public Insurance Adjuster?

Should I Hire a Public Insurance Adjuster?

After experiencing property damage or loss, you might be left feeling anxious and worried. You’ve lost something of yours and now you’re not sure how you’re going to repair or replace it. After the damage occurs, your insurance company will send an adjuster out to assess the damage.

However, your insurance company’s adjuster is looking out for your insurance company. This is why you need to consider hiring a public insurance adjuster. Once hiring a public insurance adjuster, you’ll have someone out on the scene who works for you and has you in his or her best interest.

Not sure if hiring a public adjuster is the right decision for you? Continue reading below for everything you need to know about the benefits of hiring a public adjuster.

1. Experience

A public adjuster has the experience and expertise needed to understand the claims process. It’s not difficult to misinterpret something on your insurance policy. Without having an adjuster on your side, insurance companies have the upper hand.

Their experience is going to be what gets you the best results possible. They’ll be able to guide you throughout the entire process ensuring that every step you take is the correct one.

2. Time Savings

Not everyone has the option of putting their life on hold to deal with filing a claim, speaking with insurance companies, collecting all proper documentation, and so on. Hiring a public adjuster will save you time.

An adjuster will manage your claim for you and only contact you when you’re needed. And because your public adjuster knows about the claims process, he or she will ensure that the claim is filed and settled as quickly as possible.

3. Maximized Settlement

Not only will a public adjuster make the process go by much faster, but he or she will be able to maximize your settlement as well. One study showed that public adjusters are able to negotiate with insurance companies. This ultimately increases the settlement amount for you.

Without a public adjuster, your insurance company would only pay out what they decide to. An adjuster on your side will be able to negotiate a larger settlement with them, which can only benefit you.

4. Knowledge of Rights

Aside from knowing how to negotiate with your insurance company, a public insurance adjuster will also know your rights. This is a major benefit when dealing with a denied claim. The adjuster acts as a witness to the scene and damages and can also guide you along the way if more aggressive action is required to get the settlement you deserve.

Do You Need a Public Insurance Adjuster?

After reading through this guide, we hope you now know how important it is to hire a public insurance adjuster.

Have you experienced property loss or damages? If so, be sure to contact us today to see how we can help you!