If you have a fire or someone breaks into your house and you need to file a claim on your homeowner's insurance, you could be in for a long and tedious process if you haven't done your home work properly, particularity with respect to your items of personal property.
For personal property claims, known as a "contents" claims, one of the first things you have to do is prepare a contents inventory of your property for your insurance company. Taking pictures of your property before having to make a claim is highly recommended. If possible take photographs of each room and, in particular, photograph expensive items and/or items that are special to you. Also, keeping an inventory of all your property is good idea, but can be time consuming. The failure to do these things before you have a claim may result in weeks or months of work for you to properly document your loss and give the insurance company an excuse for not promptly paying your claim.
If your property was lost in a fire, most insurance policies require the property owner to take steps to protect the remaining property from further damage. These steps should be taken as soon as possible. You need to make arrangements to have any openings in the structure covered in order to secure your property from further damage or theft. It is not recommended that you dispose of any damaged property until your claim is settled, except for health and safety reasons.
The next step you should take is to determine how you are going to proceed with the settlement of your claim. Any items that are damaged, even if only slightly, should be listed on the contents inventory sheet. Identify items with a model number and/or brand name where possible. If items such as electronics have manufactured dates on them, list the date. This is the importance of keeping an inventory of your property before you have a loss.
If you didn't keep an inventory, start your contents list with one room at a time. Begin at one wall and work your way around the room, listing all of the items damaged or lost. If possible make notes to indicate where items are located will help to find the item when the insurance company needs to verify the item.
Once you have made a list of all of the contents items that were damaged or stolen you then have to price each item. The internet has made pricing of most items easier; but it is still time consuming. If you know that you pay an average of price for certain items, then use that as the price for all those items.
Do not put down the price that you paid to purchase an item on sale. It does not matter what you paid for an item. If your purchased Replacement Cost Coverage, the Replacement Cost Value (RCV) of an item is based on what it will cost you to replace a particular item at today's prices. Typically, the cost of replacing an item is greater than what you paid for it. You don't have to wait to find the items on sale again.
Often insurance companies will require that you indicate the purchase date of the items in the contents inventory, because the insurance company wants you to age the item. The age of the item is used in order to apply Depreciation to arrive at the Actual Cash Value (ACV) of the item. Depreciation is also is used to take into account for usual wear and tear of the item. The Replacement Cost Value (RCV) of an item minus the Depreciation equals the Actual Cash Value (ACV) for the item that will be initially paid to you.
The amount of Depreciation applied to an item does not have to be based on the age of the item. The condition of an item may not reflect the age of the item. Items that are not used often should not be depreciated at the same rate that items used every day are depreciated. Also, keep in mind that there are items that might maintain or even increase in value such as fine furniture, antiques, art or jewelry.
After you have presented your claim and received payment based on the Actual Cash Value (ACV) of your property, if you have Replacement Cost Coverage, you will have money to start to repurchase the lost or stolen items. Under the Replacement Cost provisions of most policies, you are required to purchase the items damaged or lost and give the receipts for the purchase to your insurance company. After a review to insure that the items you purchased are of the same type and quality as those that were lost or damaged, you will then receive an additional payment for the cost to replace the item.
Your insurance policy may require you to advise your insurance company of your intent to make an additional claim under the replacement cost provision of your policy within a certain number of days, typically 180 days from the date of the loss. Not 180 days from the date you receive the Actual Cash Value (ACV) payment. Make sure that you notify your insurance company, in writing, of your intent to make a claim for the depreciation withheld from your initial Actual Cash Value (ACV) payment within the time frame required in your policy.
At the Law Office of Stephen O'Rear, P.C. we help people with insurance claims.
Information in this article is proved for general informational and educational purposes only and is not offered as legal advice upon which anyone may rely. The law changes frequently. Legal counsel relating to your individual needs and circumstances is advisable before taking any action that has legal consequences. This firm does not represent any person unless and until it is retained and agrees to provide such representation in writing.