Below, the experts at Professional Restoration answer common questions about property damage insurance claims.
What’s the difference between actual cash value and replacement cost coverage?
Actual cash value (ACV) is the cost to repair or replace an insured item of property at the time of loss, minus its depreciation value. Personal property, often referred to as contents, is typically settled at AVC unless the policyholder has replacement cost coverage.
Replacement cost coverage is the cost to replace lost or damaged property with new property of like kind and quality at current prices. Replacement cost coverage is available for buildings and contents for an additional premium.
How long does it typically take to settle a claim?
The time it takes to settle depends on several factors including coverage limits, company procedures, the type of damage, and so on.
Policyholders have the right to be paid for covered losses in a timely manner. However, reaching an agreement can take anywhere from a few months to a few years.
Check your policy for important deadlines to help guide your claim in a timely manner.
Who is responsible for debris removal?
Debris removal varies from policy to policy. You can find out if your policy includes this coverage in the “Additional Coverages” section.
Generally, as long as the debris is the result of a covered loss, like a fire, for example, the insurer will pay the expenses to remove the debris. However, money available for debris removal is usually a percentage of total physical loss. Anything beyond that amount would fall to the policy holder.
Debris removal may be included in your current policy, or it may not. Check the “Additional Coverages” section of your policy for more details.
Can I pick my own restoration company, contractor, etc.?
Absolutely! All insurance policyholders have the right to work with their preferred restoration company, general contractor, or builder.
In most cases, the insurance company will offer a list of preferred vendors during negotiations; but this is only a formality, you don’t have to work with a vendor recommended by your insurance company.
Of course, the insurance company’s preferred vendor list may include highly qualified contractors, so do your homework and review the options so you can work with a restoration company that you’ve hand selected.
When looking for a contractor or restoration company, consider their experience working with insurance adjusters and property damage claims. It’s also wise to review their reputation and service areas to ensure they’re a good fit for the job.
What if I don’t agree with the claim amount? Do I have to accept their offer?
You don’t have to accept an offer you believe underestimates repair/rebuilding costs or the damage to your property contents.
Insurance companies are aware that most people aren’t familiar with construction methods, material costs, and depreciation values. To help you evaluate losses, your insurer will assign an adjuster to your claim. This adjuster works for the insurance company and will use several strategies to mitigate the payout.
The first step toward resolution is hiring a third-party to assess the damage and provide an estimate. If you hire your own appraiser, the appraisal amount will typically recommend an amount substantially higher than what your insurer provided.
A large insurance claim is like a business negotiation; at this point, you can negotiate with the insurance company using the estimate of your preferred appraiser; but if you still can’t agree, the “Appraisal Clause” of your policy offers another solution.
The Appraisal Clause activates when you and your insurance company fail to agree on the cash value of your claim. Generally, the Appraisal Clause permits you and the insurance company to each hire an independent appraiser. The two independent appraisers decide on a third appraiser. When two of the three appraisers reach an agreement, the issue is resolved.
It should be noted that the cost of hiring a third-party appraiser is the responsibility of the policyholder. However, activating the Appraisal Clause usually benefits the property owner by increasing the cash value of the claim.
What is bad faith?
Insurance companies have an obligation to uphold their end of the insurance bargain. Specifically, this means defining a realistic claim settlement value and doing so in a timely manner.
However, there have been instances where insurance companies have ignored or purposefully thwarted the rights of their policyholders. This breach of obligation is commonly referred to as bad faith.
To investigate and resolve a bad faith claim, policyholders typically need the expertise of a bad faith attorney. In addition to the money owed to you by your insurer, a bad faith attorney may be able to secure compensation for your lost time and emotional distress.
What is a public adjuster?
Unlike a staff adjuster who works for the insurance company, a public adjuster works for you. A public adjuster is licensed by the State Department of Insurance and functions like an independent insurance claims adjuster.
Generally, public adjusters take on fewer cases and can typically dedicate more time and resources to defining a cash value for a claim.
In many cases, a public adjuster can also function as a third-party appraiser and is often a useful advocate in bad faith insurance claims.
Depending on the circumstances, public adjusters work on an hourly rate or a contingent-fee basis. In Colorado, a typical fee is 10 percent of the amount recovered from insurance.
Can Professional Restoration rebuild my property and help with my insurance claim?
Yes! Professional Restoration is a full-service restoration and reconstruction company.
And because we’ve been helping property owners in the Denver Metro Area for nearly 30 years, our technicians have decades of experience dealing with insurance companies and insurance adjusters.