1. Do you have Replacement Cost Value coverage? It is important to know whether your insurance policy provides replacement cost value (RCV) coverage or actual cash value (ACV) coverage. RCV coverage entitles you to recover the cost to rebuild your home after a covered loss. ACV—which is RCV less depreciation—only entitles you to recover the actual cash value. Other words, the insurance company depreciates the repairs based on the age and wear and tear of the item. For instance, if your home has a 30 year roof and the roof is 10 years old at the time of the covered loss, then the insurance company could depreciate the repair cost by 1/3 and only pay you for 2/3 of the cost to replace your roof. Although generally more expensive, ACV coverage provides broader coverage needed to fully replace your damaged property.
2. If you remodel or add-on to your home, let your insurance company know so the policy reflects the new increased value of your property. You want to make sure your insurance policy fully covers the cost to repair or replace your property.
3. Keep an up-to-date inventory of your contents so they’re covered too. This isn’t always so easy. One idea – if maintaining an updated written inventory of your contents sounds unrealistic, use a video camera (or your phone) to video your contents in every room from time to time. Doing so can be very helpful in creating an inventory list after a fire or other major loss. Also, be sure to save the video (or other documentation) off-site (i.e., at your work or in the Cloud) so you have access after such a loss. Trying to recall each and every item you owned prior to a loss can be very difficult, if not impossible.
4. If your home is damaged by fire, call your insurance company right away. Even small fires can cause significant damage resulting from smoke and water throughout your home or business.
5. Confirm insurance company’s first estimate sufficient to pay for your covered damages. If your insurance company’s initial estimate is ultimately not enough when it comes time to hire a contractor (if one wasn’t consulted during initial period following loss), tell the adjuster assigned by your carrier. You may want to consult with qualified insurance or legal professionals if you suspect your insurance company is refusing to fully pay for the covered damages.
