Policy limits are the max payout, regardless of costs, correct? Miranda Paton asked 2 weeks ago
Policy limits are the max payout, regardless of costs, correct?

I have a quick and basic question:

Regardless of our costs or California law allowing things like 24- or even 36 months of ALE coverage, the dollar limits of my policy is the maximum pay out, correct?

So if I know I’m underinsured, all of the information about documenting rebuilding costs or determining fair market value of rents don’t need to be done too carefully because it will be easy to prove/obvious to my insurance adjuster that my losses/costs will exceed the limits.

I just want to save some time and effort where I can in this long, complicated process.

1 Answers
Answer for Policy limits are the max payout, regardless of costs, correct? United Policyholders Staff answered 2 weeks ago
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Hi Miranda,

The policy maximum ‘FRV’ bucket is the maximum the carrier will provide. Your Fair Rental Value (FRV) is applicable during the time period you are displaced and are rebuilding or purchasing a replacement home. Typically, this coverage is ‘incurred,’ meaning the carrier is not going to automatically give you the full value of this ‘bucket’ unless justified and needed to rebuild or replace your home. So, for example, if you receive policy limits for your home and elect not to rebuild, be prepared that the carrier may stop paying for your FRV. You should take this into consideration if you have elected to lease a temporary property, as the carrier may not pay for the full lease terms if ‘cash out’ on your dwelling.

UP provides survivor information on this topic:

https://uphelp.org/claim-guidance-publications/underinsurance-101/