Anyone who’s lost a home to a storm or fire knows very well that this is a very traumatic experience. However, things can get even worse if your insurance claim payments are not as high as you would’ve expected them to be.
The amount of claims settlement is generally determined when purchasing a home insurance policy and after that, on a yearly basis after renewing the policy. Coverage limits are usually listed on the declaration page of your specific policy. There you can check the deductibles and limits for the different types of insurance coverage, including extra living expenses, contents and structure or building.
When someone files a claim, insurance adjusters are sent to the claimant’s address in order to evaluate the damage to the contents of the property and the property itself.
For instance, let’s consider that your home was burned down by a fire. In this particular situation, the adjuster is going to investigate the flame and smoke damage, but also the water damage that resulted from the intervention of the fire department.
When getting home coverage, it’s very important that you base it on the actual cost of rebuilding your property. This includes labor and materials. When you decide to renew your policy, the agent will determine how much it would cost to rebuild your home.
Each damaged item is going to be carefully reviewed by the adjuster in order to get a very accurate rebuilding or renovation estimate. As such, in the event of a catastrophe, your house is going to be rebuilt exactly the way it was before the damage occurred.
Based on the new local building codes, older properties may require updating, yet this highly depends on the extent of repairs. Because of that, the code upgrades will make returning a property to normal a lot more expensive and the cost may not be fully covered by your home insurance policy.
The VP of Utica (a New York based Adjusters International) Stephen T. Surace, gives a clear example of what homeowners in Florida had to go through. After the state was swept by hurricanes, in order to meet building codes, homeowners who didn’t have hurricane shutters had to get them fast. There were, of course, a lot of them who didn’t have the shutters, so they ended up paying for the damages from their own pocket.
Therefore, if you have a homeowners insurance policy, but you didn’t upgrade it so that it includes building codes, you can get law and ordinance coverage. Also, bear in mind that not every natural disaster is covered by a homeowners policy (for instance floods and earthquakes). Because of that, you need to get a special policy to be covered for such damages.
It might be that a different insurance adjuster is going to handle your claims settlement for personal belongings. In this regard, the settlement check will depend on previous coverage decisions. What this means is this: if you bought cash-only value coverage, the insurance company is going to reimburse you for your belonging’s depreciated value.
For more peace of mind, you should get replacement cost coverage. This way, you’ll be reimbursed for the amount it costs to buy similar, new items.
Contents coverage is usually set as a percentage of your property’s coverage (for instance fifty percent). So if you have a home that is insured for 300 thousand dollars, then your belongings are going to be covered for one hundred and fifty thousand dollars. You can also add extra contents coverage and coverage for certain expensive items that aren’t completely covered under your standard homeowners insurance policy.
The adjuster will carefully inspect the damaged contents of your home, including decorations, clothing, furniture, etc and then ask you for an inventory of your family’s possessions. After that, they’ll let you know whether the items can be replaced, repaired or cleaned.
Extra living expenses
Extra living expenses are the last factor an insurance company will check. These are the expenses you’ll be forced to consider as a result of not being able to live in your home during the reconstruction / repairs process. This type of coverage is usually set at fifteen percent of your home’s coverage. This means that if your home is insured for 300 thousand dollars, your extra living expenses would be 45 thousand dollars.
Make sure to check your homeowner’s policy for specific coverage and exclusions.