Personal Property Inventory / Dwelling Matt Busch asked 9 months ago
Personal Property Inventory / Dwelling

Hello,

My family of four was recently displaced from our home due to total loss house fire roughly 5 weeks ago.

While we wait for insurance to provide their estimate on repairs, I’ve a few questions.

  • Will we still be able to utilize code update coverage and recoup our depreciation if we choose to tear completely down (foundation and all) and start fresh on same lot? Insurance is saying it can be renovated but the cost is more than likely going to be very close to coverage limits so have not been bothered by this!
  • Insurance offered 50% payout on personal property limits and claimed no questions asked! They claimed if we surpass this number and provide proof they would cover the difference up to limits. Is this number negotiable since insurance claimed it was a standard percentage offering?
1 Answers
Michael Stoycheff Michael Stoycheff Expert answered 8 months ago
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Matt,

Sorry your family is experiencing this. You should absolutely be able to recover your depreciation and Law & Ordinance coverage if you tear down as opposed to repairing, if and only if those amounts are negotiated beforehand and upfront. The key is to come to an agreement on the total cost to repair and have those numbers earmarked in the adjuster’s estimate and Statement of Loss. Once you have that you can let the carrier know your plans and that you intend to collect on those when the new home is replaced. Law & Ordinance will be harder but as long as you build the new home to the most current code you should be fine. Make sure to talk with your GC about the old house and its construction vs the new house and what changes would be required to repair the old home to today’s most current code.

In most states the carriers are obligated to offer a certain % of the policy limits up front due to a total loss. That is what they did for you. However, I would tell them that you need all of your contents inventoried above and beyond the 50% limit to value the entire loss on a replacement cost and actual cash value basis. What if the ACV is over 50% of your policy. You’ve shorted yourself at that point on the front end. You need to valuate the entire contents loss. They should offer to do this for you but they won’t. If you have the ability, go ahead and value it yourself. If you don’t, have an outside vendor do this for you. There are companies that are policyholder friendly who do nothing but this. I hope this helps.