If your home was in the path of severe weather, it is important to have a full understanding of the insurance process and the steps involved in a storm restoration project. Investing a small amount of time to learn this information now may be the difference between a professional repair, or an amateur nightmare.
It is important to fully understand the Insurance Process:
Before a storm you should read your policy and then talk to your agent about what your policy covers. You have already selected your insurance company but there are many differences in home insurance policies, the types of coverage, and the ways that your insurance claims are handled by your insurance company. In response to increased weather activity, many insurance carriers have instituted sweeping changes that have severely limited the coverage of homeowner’s policies. Many property owners are unaware that they are not properly covered until it is too late. That is why it is highly recommended to talk with your agent regularly. Some of the topics you should discuss with you agent are:
Replacement Cost Value (RCV) vs. Actual Cash Value (ACV) Policies
After you file a storm damage claim, there are two methods your insurance company may use when compensating you to bring your home/property to a ” pre-loss condition”; one is a Replacement Cost Value (RCV) policy and the other is an Actual Cash Value (ACV) policy: the difference being whether or not depreciation will be paid for you. Almost everything loses value over time. While your home/property generally will appreciate, the building components used to construct the building are deteriorating from age and thus lose value or depreciate. Both RCV and ACV policies will receive an initial payment called an ACV Check based on the depreciated value of the items damaged by the storm. If you have an ACV policy, you are responsible for paying the difference between the depreciated amounts paid by your insurance company and the actual replacement cost to repair your home/property to “pre-loss condition”. With an RCV policy, your insurance company will pay the depreciation for you once the repairs have been completed an RCV policy typically has a higher premium due to the additional paid benefits. Regardless of which policy you have, you are required to pay your deductible out of pocket.
Code Upgrade Coverage
Your policy may or may not include a clause to bring your property up to current building code requirements. The municipality in which you reside establishes building code requirements. If your policy includes this coverage, your insurance company will be responsible for the additional cost incurred to meet code requirements. If your policy does not include this coverage, you will be responsible to pay the additional expense out of pocket.
It is important to know that the IRC (International Residential Code) outlines only the minimum acceptable building practice. When something is built to “code” there are many instances when a contractor will take shortcuts in order to make the job go quicker, or to be more profitable, and this almost without fail means not doing work up to code. You as a property owner may never know that your current structure needs these vital upgrades. If you choose a contractor who is more concerned with the bottom line than with the integrity of your project, you may never know. Codes are changing on a regular basis. It is imperative that you talk with you agent about this coverage or you may be faced with the choice between having your project completed by a professional storm restoration contractor or by a sub-standard roofer.
It is very important to know the deductibles associated with your homeowners policy. In Colorado your policy is generally set up into to 2 separate deductibles; one for damage due to hail & wind and another for all other occurrences that may happen to your home such as fire, theft, vandalism etc… Insurance companies are starting to go from ‘dollar deductibles’ to ‘percentage deductibles’ for hail & wind claims to make up the large amount of money spent on storm damage.
Dollar Deductibles – The dollar value the insured must pay before the insurance company will pay the remainder of the claim. With a policy that has a $500 standard deductible, for example, the policyholder must pay the first $500 out of pocket. Some insurers are selling policies with higher dollar deductibles for hurricane and earthquake damage. The higher the deductible for a given policy, the lower the premium, since the insured is bearing more of the risk.
Percentage Deductibles – Percentage deductibles are based on the home’s insured value. So if a house is insured for $100,000 and has a 2% deductible, the first $2,000 (or 2% of the insurance value of $100,000) of a claim must be paid out of the policyholder’s pocket. In many states, policyholders have the option of paying a higher premium if they would rather have a traditional dollar deductible instead of a percentage one, or if they prefer to have a lower percentage deductible. Percentage deductibles are sometimes mandatory. Note that with a percentage deductible, the dollar value changes as the insured value changes.
As you can see from the descriptions above the way your policy deductible is set up could either save you thousands or cost you thousands.
Call Expert Exteriors today to go over your policy details today!!!