Most homeowners go their entire lives without making a major insurance claim. If you’re like most homeowners, then you’re not an insurance claim expert.
That’s why many homeowners are surprised during an insurance claim. Unfortunately, some insurance companies take advantage of your naivety. They offer low payouts or deny your claim without a valid reason.
Today, we’re highlighting 3 things nobody tells you about making a homeowners insurance claim.
You filed an insurance claim. Your insurer inspected the claim and approved everything. You assume you receive the payout immediately. Unfortunately, that’s not the case. You might not receive the payout immediately.
Yes, some insurers drag their feet with payment. However, it’s also possible your payment goes through your mortgage company or property management company.
If you live in a condo or apartment, or if you are still making mortgage payments, then your lender or management company may be listed as a co-insured on your claim. The co-insured party may only release funds after inspecting the repairs to verify they were made correctly.
Homeowners insurance covers your property and anything inside it. However, many homeowners are surprised by how little their possessions are worth.
The difference comes down to cash value and replacement value.
With cash value, the insurer evaluates the cost of your possessions minus their depreciation. If you bought a new iPad for $1,000 five years ago, then that iPad may only be worth $300 today. That’s depreciation, and it significantly lowers the value of your possessions.
Some homeowners pay extra for a replacement value policy, where the insurer agrees to compensate you for replacing lost items. Even replacement cost policies can have low payouts: the insurer agrees to replace the item with a similar item. Your 2016 iPad, for example, might be available from Craigslist for $500 today.
If you have a replacement cost policy, in most cases you must actually replace those items to receive compensation. Your insurer will not give you money, then ask you to find replacements. Instead, you find replacements, send the receipt to your insurance company, and the insurer compensates you for replacing the item.
For more information on handling insurance claims, see Dealing With Home Insurance Adjusters and The Guide To The Insurance Claim Process.
That’s why many homeowners are surprised during an insurance claim. Unfortunately, some insurance companies take advantage of your naivety. They offer low payouts or deny your claim without a valid reason.
Today, we’re highlighting 3 things nobody tells you about making a homeowners insurance claim.
Your Bank or Property Management Company Gets Paid Before You
Yes, some insurers drag their feet with payment. However, it’s also possible your payment goes through your mortgage company or property management company.
If you live in a condo or apartment, or if you are still making mortgage payments, then your lender or management company may be listed as a co-insured on your claim. The co-insured party may only release funds after inspecting the repairs to verify they were made correctly.
Replacement Value vs. Cash Value for Possessions
The difference comes down to cash value and replacement value.
With cash value, the insurer evaluates the cost of your possessions minus their depreciation. If you bought a new iPad for $1,000 five years ago, then that iPad may only be worth $300 today. That’s depreciation, and it significantly lowers the value of your possessions.
Some homeowners pay extra for a replacement value policy, where the insurer agrees to compensate you for replacing lost items. Even replacement cost policies can have low payouts: the insurer agrees to replace the item with a similar item. Your 2016 iPad, for example, might be available from Craigslist for $500 today.
You Must Replace Items to Get Compensation
For more information on handling insurance claims, see Dealing With Home Insurance Adjusters and The Guide To The Insurance Claim Process.
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