If you experience hurricane damage, you are likely to use your homeowners insurance policy to reimburse you for the repairs made to your property. How this is done depends on the type of policy your have. There are two types: Actual cash value and replacement cost.
Both types of insurance coverage help you with repairs. However, actual costs value policies reduce the amount owed due to depreciation while replacement policies do not.
Whether you have an actual cash value or replacement cost policy, it is a good idea to keep an inventory of your personal property. Having this list will help you if you experience a hurricane loss.
Actual Cash Value Coverage
Look at your homeowners insurance policy. If it has actual cash value coverage, the insurer will determine the value to replace your personal property or repair your home by deducting depreciation from the value. So, a 2-year-old TV that cost $1,000 at the time of purchase will be reimbursed for less than $1,000 to take into consideration the age and use of the TV. The amount offered may not be enough to purchase another TV of the same quality or size.
What does this mean for insureds? If you have actual cash value coverage, the claim amount may not be equal to the amount needed to replace or repair.
Keep in mind that most insurance companies give homeowners the option to choose actual cash value coverage for personal property. However, they do not offer this coverage for the home structure.
Replacement Cost Coverage
Unlike actual cash value coverage, replacement cost coverage does not deduct for depreciation. Most policies automatically cover a home structure with replacement cost coverage. Then, they give you the option to purchase, at a higher price, replacement cost coverage for personal property.
How does this work? If you purchased an 80-inch TV five years ago, your insurance company will provide you with enough money to purchase an 80-inch TV of the same quality at today’s price. It does not matter how old your TV is or how much you paid for it at purchase.
When it comes to repairs, the replacement cost dwelling coverage pays for the materials and labor at today’s prices. Once again, the insurer does not consider the age of the home or the wear and tear. If a hurricane takes off your roof, you will get money to put on a new roof. The insurer will not consider the age or condition of your roof prior to the damage.
Personal Property Payouts Start with Cash Value
If you’ve lost personal property in a hurricane claim, you will need to submit a list of damaged items to your insurer. This will be easier to do if you keep an inventory of the personal property in your home. Once you have properly submitted your personal property claim, and the claim has been approved by your insurance company, you will receive a payout check.
If you’ve experienced hurricane damage, consider hiring a public adjuster to help. Aftermath Adjusters & Consulting can work with your insurance carrier to get you the highest payout possible. If you have concerns about your hurricane claim, give us a call today at (954) 329-2456!