Buying rather than rebuilding Don Logan asked 4 weeks ago
Buying rather than rebuilding

My house burned down in the Eaton fire and I have a replacement cost policy with my insurance company

My Part A policy limits on the house that burned down add up to $2 million and my insurance company’s Xactimate RCV (replacement cost value) estimate is $1 million. If I decide to buy a house for $2 million (rather than rebuild):

A) Does my insurance company have to pay me the difference between the purchase price ($2 million) and its RCV ($1 million)? Or,

B) Does the insurance company only pay me this difference if I am able to convince the insurance company that the RCV of the house that burned down was at least $2 million?

1 Answers
Answer for Buying rather than rebuilding Alexis Ricci Staff answered 4 weeks ago
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Hi Don,

We are sorry for your loss. The short answer to your question is ‘B.’

The carrier owes you a comparable quality property, whether you rebuild or purchase. There is a large discrepency between the given the information you provided (Coverage A limits are $2,000,000) and the carrier’s initial estimate of $1,000,000. 1) review the carrier’s estimate in detail to make sure it includes the rebuild costs for your home completely including comparable quality materials and workmanship. Here is a great resource on the UP website to help you with this process:

We would strongly recommend that you:

1) Review the carrier’s estimate in detail to make sure it includes the rebuild costs for your home completely including comparable quality materials and workmanship. Here are some great resources on the UP website to help you with this process:

https://uphelp.org/claim-guidance-publications/the-scoop-on-scope-of-loss/

https://uphelp.org/claim-guidance-publications/xactimate-demystified/

https://uphelp.org/claim-guidance-publications/insurance-recovery-tips-for-the-dwelling-part-of-your-claim/

2) Make sure the carrier’s estimate includes all necessary ordinance related repairs to rebuild your home at the loss location. You are entitled to take these ordinance or ‘code’ required upgrades and apply these costs to your rebuild or replacement budget. And if needed, you should request this from your carrier in writing. There are some great resources on the UP website, such as:

https://uphelp.org/claim-guidance-publications/sample-letter-requesting-collecting-policy-benefits-for-building-code-upgrades/https://uphelp.org/claim-guidance-publications/sample-letter-requesting-collecting-policy-benefits-for-building-code-upgrades/

https://uphelp.org/claim-guidance-publications/buy-or-rebuild-faqs-on-replacing-a-dwelling-after-a-total-loss/

And if needed, you can review our Professional Help directory for licensed professionals in your area to assist with your claim adjudication here: https://uphelp.org/sponsor-location/california/