Is there any recourse when policy limits are below the replacement cost of the home? Farmers Insurance is offering to pay the maximum on the policy limits, but it is still below the appraised value for the dwelling. Definitely under insured. They used a module at renewal allowing for $190 per square foot for replacement. The appraisal is saying $300 per square foot. This is a large discrepancy. Is there anything that can be done?
The general rule of law is that, despite what most people might assume, agents and insurers don’t generally have a legal duty to advise the client regarding how much insurance to buy. There are exceptions to this rule such as in a situation where the client asks and the agent actually provides the advice, or where the agent holds him/herself out as an expert on the issue. (Merely claiming to be a competent or superior agent isn’t usually enough.) Depending on the circumstances of your renewal discussions it may be possible to characterize the use of the “module” as a form of advice about replacement value that might support a claim against Farmers or your agent, though I’d be surprised if Farmers hadn’t included some type of disclaimer, basically saying that it’s your responsibility to determine how much insurance you need. If you’d like to discuss this further please email me at email@example.com and we can set up a time for a brief phone consultation. I hope this is helpful.