By: P. Andersen, 8/26/14
Sometimes managing a loss and resultant claim is all about the big thing, the big loss, and the true hardship. Sometimes it is something simpler, the smaller things that make a difference. During a repair of a damaged wall in an insureds residence, painting was required.
Most homeowners’ property coverage is written on a “Replacement Cost” basis, which relates to the concept of “making whole” as we discussed in a previous blog. Replacement Cost means you are paid on a covered claim with the goal of replacing the lost or damaged property with like, kind and quality materials at current prices without the application of depreciation. Replacement Cost became the norm because the old way, Actual Cash Value*, was creating a hardship with policy holders when a claim was paid. That 5 year old couch might have an actual cash value of $90, but replacing it could cost 10 times as much!
So, back to our client with the wall that needs painting… We let the insured know that as a part of Replacement Cost, the entire room was eligible to be painted, because making them “whole” meant the entire room needed to have a matching color.
You rely on your insurance agent to assist you when you have a claim, be sure you trust the claims department to be knowledgeable, interested, and thoughtful. I know those are the words I would use for Levitt-Fuirst’s claims department…
*Note: Most of your auto policies are on an actual cash value basis, with claim payments being limited by the blue book value of the vehicle. There is often a rider for leased vehicles that raise the claim payment on a total loss to cover the remaining lease payment, but in general, this is the industry standard. Classic Cars, you ask? Agreed Value, but you probably read that in this blog, posted a while back!