The Mystical World of Claims Payments Revealed!
Most of us don’t have the time (or inclination) to sit down and prepare a cost/benefit analysis on our home insurance. And unless you’re receiving Ellis Insurance’s brand of exceptional service and intelligent insurance, selecting home insurance may amount to throwing darts at a wall and hoping for the best.
Buying the right insurance coverage is critical. There is no worse time to realize you are not properly covered than the moment that you have a claim…and receive a fraction of the benefit you anticipated. The following illustrations show how most claims are calculated, laying bare the secrets of home insurance and providing some insight on how to select the appropriate insurance in the first place.
Buying the right insurance coverage is critical. There is no worse time to realize you are not properly covered than the moment that you have a claim
Note: most insurance companies require you to insure your home’s value at 100% of the replacement cost of the home. Typical replacement costs for homes in New England can range from $150 per square foot to $200 per square foot or more.
Your 10-year old home is damaged in a hurricane. The cost of repair is $10,000. Your policy limit is 100% of the replacement cost. You’re paid in full, less the deductible when you have completed the repairs. No problems here!
Your 10- year old home is damaged in a hurricane. The cost of repair is $10,000. The replacement value of your home is $400,000, but you have a policy for only $200,000 (only 50% of the replacement cost). The deductible on your policy is $1,000, but you only receive a check from the insurance company for $4,500. Uh-oh.
Here’s how the claim amount was calculated:
The insurance company will pay a fraction of the claim, based on the ratio of purchased insurance to the actual value of your home:
$200,000 insurance carried/$400,000 actual value X $10,000 loss = $5,000, so…
$5,000-$1,000 deductible = $4,000 claim payment
The moral of the story? Insuring your home to 100% of its current replacement cost equals full coverage on any loss.
Ellis Insurance can help you select the right home insurance for your unique needs, and will work with you to estimate a fair replacement value for your home. We’ll provide you with expert assistance and unmatched service, as well as coverage that may extend to 125%, 150%, or even Full Cost Replacement Coverage. With Full Cost Replacement Coverage you are ensured repairs of like kind and quality at current prices, even when costs exceed the coverage amount – it’s a “best of breed” solution.
Get an Ellis Insurance Tune-up, our exclusive 4-Step systematic process for eliminating gaps & inconsistencies, reducing premium, and improving coverage. There’s no obligation, and if you have any questions, please contact us at firstname.lastname@example.org.