The Property Claims Process Can Be Intimidating
Insurance is one of those things that every homeowner needs, but no homeowner wants to have to utilize. Unfortunately, in states like Colorado, hail storms are inevitable. From April to September, dark clouds form over the front range. Sometimes, it brings heavy rains and winds, but if the conditions are just right, hail stones form and start falling from the sky.
When a hail storm hits, the damage it causes has to be repaired.
You call in to the insurance company, inform them of the damage caused by the storm, and the insurance company schedules a time for an adjuster to inspect the property. The adjuster shows up, performs his inspection of the property, and notates any confirmed damage on a statement of loss. Here are some terms you will want to get familiar with to understand the statement of loss.
Let's start with the basic terms you need to know to make sense of your insurance paperwork:
Key Terms to Know
- Statement of Loss: A statement of loss is a itemized estimate, produced by the insurance company, that includes all covered items on an insurance claim.
- Replacement Cost Value (RCV): The amount of money needed to make repairs to your home at current prices of materials & labor, or to replace your belongings at today's cost of a like-kind and quality item.
- Depreciation: The loss in value of your property as it ages or experiences normal wear and tear.
- Actual Cash Value (ACV): Actual cash value is calculated by taking the amount of money needed to repair your home at current prices of material & labor (RCV), and subtracting the depreciation, or loss in value over time.
- Deductible: A homeowners insurance deductible is the out-of-pocket amount you pay before your insurance kicks in.
RCV Coverage vs. ACV Coverage
There are different types of policies, but the most common you'll come across are either ACV coverage policies, or RCV coverage policies.
- Actual cash value (ACV) coverage pays you what your property is worth today. Actual cash value is calculated by taking what it would cost to buy your property new today, and subtracting depreciation for factors such as age, condition and obsolescence.
- Replacement cost value (RCV) coverage is a product at 100 percent, with no use or diminished life span. On most occasions, during an insured loss, an estimate will be calculated based on the full, like-new replacement cost of all damaged items. The insurance company will pay you the ACV value, minus your depreciation and your deductible. Once repairs are completed and confirmed, you will recover the depreciation money.
How to Find out What Coverage You Have
If you don’t know what kind of coverage you have on your policy, call your insurance agent. They will be happy to clarify policy details with you. We have had many customers that did not know what kind of coverage they had before a loss, only to find out they have ACV coverage. This means you will not be able to receive your depreciation, and will have to pay more money out of pocket if you do experience a loss.
