Jim Conlon asked 2 weeks ago Our insurer (State Farm) is offering a 50% advance payment of our Personal Property amount in exchange for us agreeing to providing a full inventory of the lost property and obtaining the property coverage within 36 months.
What are the pros and cons of this offer?
Hi Jim,
Ultimately, your choice is situational based on what you feel your personal property is valued at and/or what you intend to do (replace a lot of times). To break down some points, per your request:
Pros:
Immediate Financial Relief: You’ll receive 50% of your Personal Property coverage upfront, which can help with immediate expenses while you recover from the disaster. Note, the carrier is required to give you a 30% advance (up to $250,000) of your Coverage A limit towards personal property. This could be more or less than their offer of 50% of your personal property limit.
Cash Flow Advantage: Having more cash in hand now allows you to begin replacing essential items without waiting for the full claims process to complete. You will still need to inventory your lost personal property and submit replacement receipts to secure the remaining 50% (up to) of your personal property limit.
Time to Document: The 36-month timeframe gives you substantial time to carefully document all lost items, which can be overwhelming to do quickly after a disaster.
Flexibility: You’ll have time to thoughtfully replace items as needed rather than rushing purchases.
Cons:
Documentation Requirement: You’re still obligated to provide a complete inventory of lost items, which can be time-consuming and emotionally difficult after losing everything.
Time Pressure: The 36-month deadline could create stress as the deadline approaches if you haven’t completed your inventory or purchased replacements and/or the carrier takes extra time in their review or processing or your inventory. Often the inventory process is multiple inventories, as the carrier’s rarely are 100% accurate with their pricing and evaluation of your inventory; you will need to allow time for you to review and resubmit information/missing items to the carrier.
Possible Depreciation Issues: Depending on your policy specifics, the final 50% payment might be subject to depreciation calculations unless you have replacement cost coverage, and which you will still need to submit replacement receipts to secure any depreciation held back by the carrier.
We would recommend that you ask State Farm for specific terms regarding this advance payment, including time limits for submitting your detailed inventory and/or replacement receipts. You can try asking the carrier to waive this inventory requirement. Check out UP’s great resource: