|
To be clear, we do not have any public adjusters working for us - we do not act as public adjusters for our client. We can not and do not attempt to settle claims for consumers nor negotiate with any of your insurance carriers - that would be illegal.
|
RCV - Replacement Cost ValueWhat is Replacement Cost? Well, according to State Farm, RCV cost is the cost necessary to repair or replace your entire home. When you insure your home for its replacement cost, your insurer will reimburse you for the cost of rebuilding or repairing your home, based on the size and structure of the home that was lost or damaged.
The most appropriate way to estimate the replacement cost of your home is to hire a building contractor or other building professional to produce a detailed replacement cost estimate. Or your State Farm® agent can utilize an estimating tool from Xactware Solutions—to assist you with an estimate. Only the cost of the property's structure and its associated systems, fixtures, and finishes will be included in the estimate; land value is included in a home's market value but should not be included in the amount of insurance you buy. Benefits: In the event of a loss, replacement cost coverage will help your family return to their home and usual quality of life with minimal financial interruption. For the best protection, experts recommend that you insure your home for at least 100 percent of its estimated replacement cost. Risks: Replacement costs can change over time, so you should review your policy annually to make sure its coverage meets your needs. Inform your insurer if you have upgraded or improved your home, because these alterations may increase your home's estimated replacement cost. Also, you'll want to stay informed about changing market conditions in your area. Rising labor, materials, and transportation costs can directly affect your home's estimated replacement cost. For maximum protection, consider a policy that includes an inflation clause that automatically adjusts to account for changes in construction costs. |
ACV - Actual Cost ValueThe ACV is the "Actual Estimated Cost" of the insured product. Lets say you have a bottle of water and you have drank half of it (50% left). That bottle of water was purchased and insured for $1.00. Your deductible (copay) is $0.10. So, as your adjustor estimates your loss, they will depreciate the consumed portion (50%). Let's see how that looks:
$1.00 Replacement Cost Policy -$0.50 (50% Depreciation) =$0.50 ACV ...then, your carrier will deduct your deductible ($0.10). This is your commitment to your policy and it is illegal to have a contractor "eat it." So, your "first check" will for for the following: ACV - Deductible = Check $0.50 ACV -$0.10 Deductible =$0.40 First Check Now, we all know that you can not replace your bottle of water for $0.40, but that is irrelevant. Why? Well, once the repairs have been completed, you will submit all invoices to your carrier and they will indemnify you. The key is to have reputable companies do the work and make sure they abide by all Manufacturers Installation Guidelines, City, County, and IBC/IRC Codes. This is your property! Do not let someone install inferior products on it as you will lose equity. |
Market ValueWhat is Market Value?Well, according to State Farm, Market value is the amount that a buyer would pay to purchase your home and its land in its current condition. Unlike your home's estimated replacement cost, its market value is influenced by factors beyond the material and labor costs of repairs or reconstruction, such as proximity to good schools, local crime statistics, and the availability of similar homes. Also, the land itself will be included in the home's market value, although it will not be covered by the homeowners policy.
Benefits: In some cases, market value coverage may be the most practical option. Take the example of an ornate older home. In today's market, the cost of rebuilding or restoring artisanal woodwork, masonry, and plastering to their original condition may be much higher than the home's purchase price. Therefore, the replacement policy premiums for the home would be high. (Special policies are available for some historic homes, but these also come at a higher price.) For a cash-strapped homeowner, buying a policy based on market value offers the best chance to recoup at least partial expenses after a loss. Risks: When you insure a typical home for its market value, you are at risk of having incomplete coverage. For example, imagine that a family buys a home for $175,000 and takes out a homeowner's policy for the same amount. The replacement cost for the home, though, is $225,000. If a fire or other insured event destroys the house, the insurance settlement would be $50,000 less than the actual replacement cost of the home. The family would either have to make up the difference themselves or build a new, less expensive home. |
What is your insurance Deductible?Your insurance company pays all claims minus the deductible you selected when you purchased your policy. The deductible is the policyholder’s contribution - the self-insurance portion of the policy - whenever you have a covered loss. It works just like a co-payment at your local pharmacy – the deductible being the co-pay portion of the transaction. At the pharmacy, you pull a ten-dollar bill (or whatever amount they require) from your wallet for the co-payment and the insurance company picks up the balance of the bill. Likewise, with property claims, the homeowner pays their contractor (us) the deductible (their co-pay), and the insurance company pays for everything else, as long as it doesn’t exceed your policy limits.
Contractors Absorbing “Eating” or Rebating Deductibles This is known as the free roof scam. See the website www.bbb.org/blog/2012/12/free-roof-and-no-deductible-offers-could-be-bad-idea for more information. Some contractors will agree to subtract the amount of a homeowner’s deductible from their final price, so that the homeowner is able to get the work done for no money out of pocket. Sounds great doesn’t it – but not so fast. We’ve all heard the saying that If something sounds too good to be true, it probably is. Not only is it a violation of most insurance policies, how does the contractor make up for the uncollected funds? What work is left undone or corners cut to make up for the “discount?” This practice can also lead to insurance fraud, sometimes committed without the policyholder being aware of what has happened. Others see it as a way of improperly profiting from an insurance claim when property owners, with or without the help of their contractor, create and submit fraudulent invoices to their insurance company. Most consumers are unaware that insurance fraud in excess of $750 is a felony in most states. To make things even worse, mailing, faxing or emailing a false invoices or cancelled checks over state lines could be wire fraud as well. There’s a good reason why the deductible is called the Insured’s contribution. Homeowners must actually contribute, out of pocket, the amount of their deductible and pay it to their contractor. |
What is the Free Roof Scam?Contractors Absorbing “Eating” or Rebating Deductibles: This is known as the free roof scam. See the website www.bbb.org/blog/2012/12/free-roof-and-no-deductible-offers-could-be-bad-idea for more information. Some contractors will agree to subtract the amount of a homeowner’s deductible from their final price, so that the homeowner is able to get the work done for no money out of pocket. Sounds great doesn’t it – but not so fast. We’ve all heard the saying that If something sounds too good to be true, it probably is.
Not only is it a violation of most insurance policies, how does the contractor make up for the uncollected funds? What work is left undone or corners cut to make up for the “discount?” This practice can also lead to insurance fraud, sometimes committed without the policyholder being aware of what has happened. Others see it as a way of improperly profiting from an insurance claim when property owners, with or without the help of their contractor, create and submit fraudulent invoices to their insurance company. Most consumers are unaware that insurance fraud in excess of $750 is a felony in most states. To make things even worse, mailing, faxing or emailing a false invoices or cancelled checks over state lines could be wire fraud as well. There’s a good reason why the deductible is called the Insured’s contribution. Homeowners must actually contribute, out of pocket, the amount of their deductible and pay it to their contractor. |
