No one wants to think about hurricane damage, however, in Florida, hurricanes happen regularly. That’s why you should understand hurricane claims and understand what it means if you have a total loss. Some people use the term totaled, when referring to a total loss.
A total home loss is a home that is:
- Damaged badly enough that it cannot be repaired
- Completely destroyed, leaving nothing of value
Is My Home a Total Loss?
There are two kinds of total loss: actual total loss and constructive total loss. If you have actual total loss, nothing of value remains. For example, after a hurricane came through the county, your house was swept away in a storm surge. You have no choice but to clear the debris and rebuild. This would be an actual total loss.
The other type of total loss is constructive total loss. In this case, although the house is not completely destroyed, the repair costs are so high that they would exceed the insured value of the home. For example, a named tropical storm flooded your home, leaving the first floor completely destroyed. Due to the water damage, the entire foundation needs to be rebuilt and interior repairs are extensive. The cost for repairs exceeds your home’s insured value.
Whether your home is declared an actual total loss or a constructive total loss, the end result is the same for the homeowner. Your insurance provider will pay the full insured value if the total loss was due to a covered peril.
If you have a guaranteed replacement cost policy, then the only type of total loss is actual total loss. Even if the repairs cost more than the insured value of the home, the guaranteed replacement cost policy must cover the cost.
Additionally, if the insurer declares a constructive loss, you will have options. You can consider the home a total loss and use the payout money to purchase a new home. Or you can choose to repair your home, but you will be responsible for the difference between the insurance payout and the actual cost of repairs.
Total Loss Insurance Claim Payouts
Even if your home is a total loss, you will still deal with the same claim and payout process. There are a few differences, however, once you get the payout. A total loss payout will be the total limit of your policy including the house and its contents.
It is up to you how you spend this check. You can:
- Rebuild on the same lot
- Rebuild on a different lot
- Buy a home on the market
- Use the money for anything else
Be sure to look at your state laws to determine how you can spend your total loss insurance claim payout.
Don’t Forget the Deductible
Insurance policies have a deductible. This is the amount you pay out of pocket before your insurance begins to pay. If you have a total loss claim, the insurance will pay for the entire policy amount minus the deductible.
For example, if you have a $1,000 deductible and a $350,000 policy, a total loss check would be issued for $349,000. This is the total policy minus the deductible amount.
Keep in mind that the deductible is typically paid per damaging event. However, in Florida, you only have to pay one deductible per hurricane season. So, if you experience two hurricane claims in one season, you will pay just one deductible rather than two.
If you believe your home may have experienced a total loss due to a hurricane, you may want a public adjuster to help with the claim. Aftermath Adjusters & Consulting will help you file your claim and deal with your insurance carrier to get you the best possible payout. Call us today at (954) 329-2456 to learn more!
