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"It's value for insurance" = what?
What formula gets me that figure?
The coverage I am required to have on the house?
sample numbers....
Rebuild cost is $225,000.
Market value is $175,000. (what it might sell for, the day before the hurricane arrived)
Insurance company required it to be insured for $225,000.
So rebuild then the insurance policy pays $225K and no re-build it only pays $175K. (?)
Depreciated value is what I should have said--say your carpet is $5000 when you installed it, depreciate that over 20 years, it's worth $100 now, Same with your kitchen cabinets, $20,000 installed, depreciated now to $2000, etc., etc. So what you would get if you didn't rebuild would be the depreciated value of your home today, the $50,000 in my previous example. To get the replacement cost you are paying for, you would have to rebuild.
Some people we know didn't have replacement cost coverage on their house. They bought the house for $25,000 and never really upped the insurance. The house they lived in for over 20 years had gone up in value, had been paid off for several years, found themselves 5 years into retirement with a house payment because their house burned to the ground. They got a check for $25,000 on a house that had a market value at the time of about $250,000.
Depreciated value is what I should have said--say your carpet is $5000 when you installed it, depreciate that over 20 years, it's worth $100 now, Same with your kitchen cabinets, $20,000 installed, depreciated now to $2000, etc., etc. So what you would get if you didn't rebuild would be the depreciated value of your home today, the $50,000 in my previous example. To get the replacement cost you are paying for, you would have to rebuild.
Some people we know didn't have replacement cost coverage on their house. They bought the house for $25,000 and never really upped the insurance. The house they lived in for over 20 years had gone up in value, had been paid off for several years, found themselves 5 years into retirement with a house payment because their house burned to the ground. They got a check for $25,000 on a house that had a market value at the time of about $250,000.
Well, lordy lordy, sounds like more insurance gotchas.
Years back an insurance agent explained to me what replacement cost meant. Granted the policy cost more (an upsell on their part) but it is one of the few insurance upgrade costs I believe should be considered.
Years back an insurance agent explained to me what replacement cost meant. Granted the policy cost more (an upsell on their part) but it is one of the few insurance upgrade costs I believe should be considered.
From experience I can tell if you don't have replacement cost you're going to be screwed . If you have a TV that is going to cost $1000 to replace you're going to get $300+/- unless you have replacement cost. I can also tell you from experience if you have a fire even if it's confined to part of the house everything is going to be junk. That smoke touches everything even if it's in a closed chest of drawers on the other side of the house. I'm not sure what did more damage between the fire, water, smoke or fireman. Another thing you're going to want to look at is if your insurance covers lodging. Ours was rent for up to a year.
I would suggest taking a video inventory every few years, walk through the house with a video camera. Open all the drawers, cabinets and closets. Take video of everything, you don't realize how many things you have. Just look at your spice rack and add it up. You have to document exactly what is/was in the house. The video will do two things, provide some proof of ownership and you'll be able to review it in the event of fire to help you remember what was there. Make sure you srore it somewhere else than your house.
After our fire they sent two inventory specialists, they went through every room in the house that was safe and documented everything. She had a voice recorder and when I say documented everything I mean everything. She opened a desk drawer and even counted the boxes of rubber bands and paper clips. "one box of rubber bands, 30 count, next item", on and on, if the item had model numbers etc she recorded them. Two of them were there for three days.
That was used to generate an inventory list. They listed the item, the replacement cost, cash value which was tyicallly about 30% and cited where the price came from. If they couldn't find an item that matched exactly they used similar item. Items in the rooms that burned had to be itemized and submitted by us. In our case the insurance company was outstanding through this entire process and didn't dispute anything, the house was still smoldering and we had a check for a few thousand in our hands. I can't praise Erie insurance enough, we even ended having to stay in the rental an extra month beyond what the policy was supposed to cover after buying a new home and they covered it after we requested it. They didn't have too.
From experience I can tell if you don't have replacement cost you're going to be screwed . If you have a TV that is going to cost $1000 to replace you're going to get $300+/- unless you have replacement cost.
I've looked at my policy from cover to cover. I see no mention of not rebuilding.
And vague terms that create uncertainty as far as what they mean.
Also, it says rebuilding cost may vary depending on material cost, labor cost, where you live, etc.
My house is not situated well on the lot. In the case of a rebuild, I might want a different type structure, that might cost the same as the coverage, or maybe even less.
When rebuilding do they pretty much tell you the type dwelling and the number of rooms, etc.?
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There's a booklet that defines actual cash value & re-imbursement (= typically meaning replacement cost)
Typically?
Why do they use the word typically? Why not use IT DOES MEAN.
My policy does not tell me which one I have and it says I would have chosen the option myself.
No I did not.
It also says here is how reimbursement works.
"We give you a check for actual cash value. Then when you replace the item we give you the extra needed."
That implies that if you do not replace any items with new ones (new meaning brand new in the sealed box), you get nothing but actual value, which is determined and calculated by them.
Suppose a ruined item has a cash value of $50.00. And replacement costs varies.
Store A may have the item for $75 and store B has it for $90.
Howard I would suggest going and talking to your insurance agent.
Quote:
When rebuilding do they pretty much tell you the type dwelling and the number of rooms, etc.?
We had no stipulations about anything being rebuilt on that lot.
Quote:
It also says here is how reimbursement works.
"We give you a check for actual cash value. Then when you replace the item we give you the extra needed."
That implies that if you do not replace any items with new ones (new meaning brand new in the sealed box), you get nothing but actual value, which is determined and calculated by them.
Suppose a ruined item has a cash value of $50.00. And replacement costs varies.
Store A may have the item for $75 and store B has it for $90.
.
That's not the way it worked for our policy. The adjuster had mentioned it was one of the better policies he had seen. As mentioned they inventoried everything and sent us the inventory sheet, or I should say inventory book. It was huge, everything that was inventoried was assigned a value and referenced usually with a link to the item online. I'll go scan a sheet...
The policy was maxed and they wrote us a few checks that totaled the full value of the policy.
Last edited by thecoalman; 01-22-2013 at 01:20 PM..
Howard I would suggest going and talking to your insurance agent.
I'd rather hear it from a non involved 3rd party.
The agent may ask me when will this big storm occur. Why do you expect such a storm, etc.
It's simple, I want to know what coverage I have, without being told what I have, by a salesman that contacts me by mail or e-mail at least once a month. They also hire students to call existing customers on Saturdays.
Maybe I walk into another agent's office to get a full explanation as if I was a new customer.
Allstate is too fishy. They have 2-3 different companies.
For example my car is insured by Allstate Fire and Casualty. That sure does not sound like auto insurance.
I'm told that to get the lower rates under one of the "other arms," I'd have to drop Allstate, go elsewhere, come back in 6 months and signup and lose all existing discounts that have been earned over the last 25+ years.
I'd rather hear it from a non involved 3rd party.
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The trouble here is your policy doesn't sound anything like the one we had.
I edited my above post in case you missed it.
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