repair or replace clause in AAA insurance policy Keith Kaminski asked 1 year ago
repair or replace clause in AAA insurance policy


My wife and I own a 2nd home in Michigan. It was severely damaged by a water event from the hot water tank. After several months of problems with the tear out and the insurance company decisions on the amount of coverage for the plaster damage, we decided to use the replacement clause in our policy to replace it with a new home and receive our recoverable depreciation.

We started to build another home before the claim date. We had a construction loan that converts to a permanent mortgage when the home was completed, which was after the claim date.

AAA denied our replacement request saying we had started the home before the claim date.

A few months after the denial, we emailed our adjuster who originally denied us to ask him a simple policy question. If we decided to build another new home after the claim date, when would recoverable depreciation be paid. His response was interesting.

“AAA has retained counsel and all correspondence and questions need to be directed to the attorney.”

I asked the attorney the same question and a month later he finally responds.

“When you obtain a construction loan has no bearing on recoverable depreciation.”

So they declined us because we obtained the construction loan before the claim, now they are telling us with the phrase above that they pay depreciation after the home is completed, which was our original argument.

A public adjuster in Michigan said we were right.

Can anyone provide insight about this situation? The policy language just simply says if you repair or replace we will pay. It seems to us that repair and replace are words that imply finished.

As the attorney says above, when you obtain a construction loan has no bearing.

We believe the adjuster lied to us.