Tips on Filing an Insurance Claim

Many purchase insurance without properly understanding the process of a claim. Most reasons being to simply comply with their banks loans or purchase a car. However, this can lead to experiencing problems   when they actually get into an accident. Frustration rises as they try to solve the unfamiliar issues based on their expectations rather than putting into consideration government regulations and the rights of an insured.

One of the most frequently asked questions is the time it takes to receive compensation. The insurance industry is supervised by the government, and although it varies from state to state, almost all states stipulate insurance claim procedures and compensation periods.

For example, once a claim is opened, the insurance company must notify the claimant that the claim has been filed within 15 days. Another is that if the insurance company denies your claim, it must provide sufficient reasons based on your insurance declaration.  Let’s take a closer look at what you can do to receive proper compensation on a claim.

 

Take time to review your policy declaration

If you have questions on your coverage, contact the insurance company or your agent.

 

Inform the insurance agent of the damage

 Before contacting your insurance company or agent, write down details on the accident. You will be talking to your agent or insurance company multiple times. To keep the story consistent, it is best to keep a memo rather than rely on your memory every time.

 

Assess the damage as accurately as possible

It is important to provide accurate information when reporting a claim. You may be tempted to give an over-estimation of the damage in order to secure enough payout.

However, insufficient evidence or data to support the extent of the damage will result in unnecessarily longer processing time and you may receive less compensation than you’d want.

Reporting an over estimation, for the damages on a commercial property with a co-insurance clause, may backfire and also put you in disadvantage. Accurate estimation of the damage is crucial in deciding whether it’s worth opening up a claim.

 

How to get an accurate estimation of the damage

Asking a professional for an estimation of the damage is recommended. For example, calling a roofing company if you suspect hail damage. They will be able to estimate the severity of the damage and the cost to repair it.

 

Keep a note on the phone conversation you had with the insurance company

If you write down when and what you talked about, you can use it appropriately when needed. Afterall, claim procedures are processed by humans and there is the likely case of mistakes.

 

Gather all detailed evidence of loss

Insurance companies pay out for damages based on proof of damage or loss. In other words, simply hoping that that adjusters will provide you with sufficient coverage may not be enough. The more concrete and detailed proof provided, the easier the claim process will be.

 

Keep a copy of all the documents submitted to the insurance company

When submitting documents, it is recommended to keep at least one copy for yourself in case the mail is lost or misplaced. Since insurance companies are also for-profit, they acknowledge the importance of providing quality service to clients. Therefore, each insurance company strives to process claims quickly and fairly. As for insureds, knowing what to expect and what they can prepare to facilitate claim process will make the whole experience smoother.

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Leading Causes of Car Accidents

Car accidents not only result in increased auto insurance premium but also affect the life of you and your family members. In this article we’ll be taking a closer look at the leading causes of car accidents and how to prevent them. Among the various causes of auto accidents, the 3 major dangers that are overlooked are eating or drinking while driving, not seating a child in the baby car seat and using your cellphone while driving. Based on a survey, 57% of drivers responded that they eat while driving, even though it is a major factor that distracts driving. 56% of people answered that they have turned around to talk to young children or passengers in the back seat. 29 % agreed that cell phone use is a factor that distracts their driving.

 

 

1) Eating or Drinking While Driving

Eating or drinking while driving acts as a distraction and slows your reaction time. This prevents you from making quick maneuvers to avoid car accidents. Based on police reports related to auto accidents, 25 percent are caused by distracted drivers. What you think is a brief moment to wipe off spilt food or drink may lead to colliding with the car in front of you. Eating and drinking while driving is not illegal. However, for your safety, it is recommended that you consume food or drink only when necessary and be extra cautious when doing so.

 

 

2) Proper Use of Car Seats

Thousands of children are said to be injured every year due to the negligence of securely seating them in car seats. It is no easy task to secure a child in a car seat when the weather is very hot or cold, when you are in a hurry because of a busy schedule, or when they are being uncooperative. However, by law, children under 5 years of age or under 36 inches tall must ride in a child safety car seat. In addition, children under 9 years old or smaller than 4 feet 9 inches, are recommended to use a booster seat with adult safety belts.

 

 

 

3) Using Cellphones While Driving

Cellphones have improved our lives in many convenient ways and has become a necessity in our daily lives. However, behind the convenience, there are some concerns, one of which is the rapid increase in the number of accidents caused by using cell phones while driving. According to statistics from the National Traffic and Highway Safety Administration (NTHSA), one out of four accidents are caused by drivers that were distracted while using a cellphone. In an effort to curb these unfortunate events, the Texas State Assembly implemented special laws to discourage the use of cell phones while driving. The law doesn’t ban all drivers from using cell phones while driving. However, it prohibits transit drivers and school bus drivers from using cellphones while minors are present.

Experts recommend the following safety measures when it’s inevitable to use cell phones while driving.

  • Use a Bluetooth or speaker mode
  • Keep your eyes on the road at all times
  • Never dial while driving
  • Avoid using your phone while driving in bad weather or heavy traffic
  • Avoid stressful conversations while driving
  • Never look up phone numbers while driving
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How to Save Money on Workers Compensation Insurance

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Except for a few states including Texas, most states require employers to have Workers Comp by law. Some states exempt businesses with less than 3 or 5 employees are from obtaining Workers Compensation. An insurance agent will be able to provide more detail on the specific guidelines of your state.

Workers Comp is regulated on a state-by-state basis, with the private insurance companies deciding the insurance premium. However, there are monopolistic states that require coverage from their Workers Comp state fund.

If you can provide supporting evidence that your business has a safety program or a low experience modifier score, some insurance companies provide premium discounts.

How Are Premiums Calculated?

The rating of workers compensation insurance starts with the classification rate assigned by the National Council on Compensation Insurance (NCCI).

For example, based on years of claim frequency statistics on Dry cleaners, NCCI sets a risk rate for the business class. Insurance companies use 700 different types of class codes. However, most businesses use only a few to classify each employee’s work type.

For businesses that are new to Workers’ compensation, insurance premiums vary depending on the types and percentage of class codes and the wages for each. For example, a business that has 15 out of 20 employees that work with heavy equipment has a higher risk rate compared to a business that has all 20 employees as clerical. The higher the risk exposure the higher the insurance premium.

According to Hartford, the basic premium= classification rate x (payroll/ $100) For example, a clerical class may be $0.20 whereas roofers who are exposed to higher risks may be $15 to $20.

Normally a business consists of employees with different roles. For example, a roofing company has roofers, accounting staff and sales staff. Correctly categorizing the class for each employee may be a great help to save insurance premiums for some businesses.

Premium Adjustments Based on Claim History

The premium for the first year of insurance is determined based on the average accident rate in the industry and the number of wages expected to be paid over the year.  After a year, the insurance company conducts an audit to ensure that you paid the right amount they insured over the past year. If you over paid, a refund will be issued. If the payroll is more than it was estimated, an additional premium may be charged.

After three years of continuous coverage, the insurance company may re-evaluate your premium based on your past claim history. The number of claims and the amount paid out by the insurance company is compared with the industry average. If it is lower than average, your premium will be lowered but in the opposite case, it will be increased.

 Safety Programs  

Businesses with expensive premium due to high-risk rates may be eligible for discounts if a safety program is in place at the workplace.

Having safety programs at the workplace reduces the possibility of an accident and even in the event of one, the preventive measures reduce claim payouts. This is both beneficial and favorable to both the insurance carrier and the business owner.

Some insurance companies provide onsite consultation to build a safety plan. There are also independent loss control consultants that provides service that trains managers and employees in order to meet industry safety guidelines.

Proving to insurance carriers that workplace safety training is in place may help in reducing your insurance expenses. Such examples could be, keeping records of drug tests, having safety committees, and educating employees on fraudulent claim prevention.

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UM/UIM COVERAGE

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Although auto insurance is mandatory, there are cases where you get into an accident with an uninsured driver. A coverage that can protect you from such situations is Uninsured Motorist Coverage (UM) and Underinsured Motorist Coverage (UIM). This coverage not only protects you from accidents where the other driver doesn’t have liability insurance but also when they have insufficient coverage to pay for your vehicle damages of bodily injury expenses.

Some consumers tend to consider Uninsured Motorist Coverage as unnecessary. However, UM/UIM coverage plays a very important role, and if there is no UM/UIM insurance, people have to go through the hassle of suing the other party to receive compensation for the loss caused by the accident. According to the IRC (Insurance Research Council) 13% of drivers in the U.S are uninsured, and the number isn’t declining.
The state with the highest rate of uninsured drivers is Mississippi (29.4%) followed by Michigan (25.5%), Tennessee (23.7%), New Mexico ( 21.8%) and Washington (21.7%).

 

What is more concerning, is that the accident probability and the amount of damage caused by uninsured drivers is higher than for insured drivers. The top reason for those that don’t have auto insurance is the cost.  However, it has been reported that 40 percent of the eight major accidents in the past decade have been caused by uninsured drivers. Due to this reason, liability coverage is legally required in most states, including Texas.

 

If you get in an accident with an uninsured or underinsured driver and are without UM/UIM coverage, you will have to pay a lot more for hospital bills or car repairs compared to the additional premium for purchasing the coverage. However, if you have the UM/UIM coverage, you can reduce financial expenses for accidents such as hit and run. You and your passengers will receive compensation for medical bills. UM/UIM coverage can also pay for lost wages if you can’t work because of the car accident. It is possible to sue the other driver even if you don’t have UM/UIM insurance, but if the other driver is incapable to provide compensation, you won’t be able to get enough or anything from the other person.

 

UM/UIM insurance is one of the coverages that are included in an auto insurance policy that is so-called full-cover car insurance.  Below are other coverages available in auto insurance that can be customized to the need of each insured.

Liability:

Covers the cost of the other driver’s injuries and property damage if you’re at fault in an auto accident.

Collision:

Coverage that can pay to repair your vehicle if it’s involved in an accident.

 

Other than Collision/ Comprehensive:

Coverage that protects against damage to your vehicle cause by non-collision accidents. For example, theft, fire, flood and vandalism.

 

PIP :

PIP ( Personal Injury Protection) covers medical expenses for you and your passenger if you’re injured in an accident.

 

Towing and Rental Reimbursement:

There are optional coverages such as “towing” and “rental reimbursement”. Rental reimbursement helps pay for your rental car costs while your car is being repaired due to a covered accident.

 

Q) What should you do if you get into an accident with an uninsured driver?

First, call the police to the scene of the accident.
Unless it is a major accident, the police may not come to the scene, but it is recommended that you report the accident.
Although it may be difficult to do so amid all the shock, having a police report can provide evidence when filing a claim. You should also contact your insurance agent if you need any assistance with filing a claim.

 

 

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Importance of Business Insurance

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The economy is gradually recovering from the pandemic, but there are still many business owners that are facing difficulties. This is due to the fact that other than sales; businesses are still exposed to various types of property and liability risks.

In fact, these risks can be more threatening than losses from poor sales. What may start from a small property damage or bodily injury accident may lead to lawsuits. Depending on the outcome, this can cause great financial hit to a business.

Major corporate companies separately hire risk management specialists to identify the risks in advance and come up with strategies to minimize the risks. However, the reality for small business owners is that they must juggle all the various roles from a chief executive to human resources.

Occupied with all the roles, it becomes difficult for you to identify and respond to underlying risks. The cost of purchasing insurance may also come as daunting.

Therefore, it is very important to mitigate the risk of accidents by obtaining business insurance. Below are answers to the most commonly asked questions.

 

Q) Shouldn’t insurance premiums go down when business is difficult due to the economic recession?

This is what most policyholders want. However, in reality, the more difficult the economy is, the higher the probability of accidents.  Therefore, insurance premiums tend increase when the economy is bad.

 

Q) Why must I have business insurance when business is already difficult?

If your business is already having financial difficulty, getting involved in an accident result in a bigger damage to your business.

Without any insurance you are taking needless risks on your own. Not having the proper coverage is also an issue.  Even if you receive compensation, it may be less than the actual amount of damage.

Therefore, it is recommended that you consult an agent and purchase a business insurance that can protect your business and your inventory (your property).

Another reason to have a business insurance in place is due to the fact that some states require insurance coverage, regardless of the size of the business.

A majority of commercial building or office building owners also require its tenants to maintain insurance through rental contracts.

 

Q) Does insurance coverage differ depending on the size of your business?

The essential coverages for small businesses owners are business property, General liability, and business income.

Business Owner’s Policy (BOP) is an insurance product that targets small business with the above coverages combined.

Each insurance company offers different coverage types depending on the business class. Therefore, it is important to check which coverages best suit your business.

If you run a big business, Business Package Policy (BPP) would be a better match. This product offers more customizable options by allowing you to add various coverages in addition to property and liability.

One important fact to note is that neither BOP nor BPP policies offer flood coverage. This is a type of coverage where a separate product must be purchased.

 

Q) What are the main factors that determine commercial building insurance?

One of the most important factors is the building’s exposure to fire hazards. Well-maintained buildings with fire preventive measures have a lower premium than those that are not.

For example, a building with explosive manufacturing will have a higher premium compared to a travel agency office.

There are many variables used to calculate the fire risk rate. Among them, building materials and construction types account for the largest portion.

Fire hazard ratings are determined through state-licensed inspectors.

They typically sign contracts with insurance companies to rate buildings’ structures. Below are five standardized rating systems that determine fire hazard ratings:

-Construction Materials

-Location

-Occupancy

– Fire Protection Measures

– Exposure

 

Q) How does claim histories affect insurance premiums?

Business insurance has a different premium rate system compared to auto insurance. In other words, the premium is not increased based on a predetermined formula like auto insurance.

Each insurance company has different guidelines but, frequent claims or large payout amounts may lead insurance premiums to increase. In some cases, an insurance company may decide to non-renew your policy.

 

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Renters Insurance

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Compared to the majority of homeowners having home insurance, only about 20% of renters have rental insurance. This leaves many renters exposed to sudden accidents without any protection. One of the main reasons is that many renters are unaware of what a renters insurance actually is. This article will go over the basics of what a renters insurance is and answer some commonly asked questions.

 

I’m renting a single-family home. Why do I need renters insurance when I don’t own the property?

Renters Insurance provides personal property and liability coverage. If you were to lose your belongings such as clothes, furniture or electronics in a fire, a renters insurance will help you cover the costs. Another case would be when you are responsible for someone’s injury while at your place. Liability coverage will help cover legal expenses and medical costs. In addition to these 2 main coverages, renters insurance provides more coverage options such as Loss of Use.

Why do apartment buildings require renter’s insurance?

Apartment complexes carry their own insurance. However, it only covers the structure of the building they own. It doesn’t provide coverage for your personal belongings or personal liability claims. If you accidentally damage the property that you are renting, the tenant is responsible to compensate for the loss. For example, if the stove that you left unattended results in a fire that damages the whole property, you will be the primary person to pay for the damages.

 

How is the price of renters insurance determined?

Renters insurance is one of the cheapest insurances that you can buy. This is because a renters policy doesn’t insure a physical property. In other words, it mainly covers your personal property and liability. Premiums are affected by location, year and construction type of the place you rent. In addition, the amount of coverage for personal property and liability coverage are also a factor.

What should I do if my property is damaged in a sudden accident?

First, contact your agent and explain the situation. If damage to the house or your personal property is large, it is important to take “emergency” measures to reduce additional damage. For example, if the window is damaged due to a storm, board it up as a temporary measure to reduce further damage. If an extensive repair is needed, contact your agent so that an adjuster can inspect the damage. If the damage is minor, you can consult a contractor to get an estimate on the repair before deciding to contact your insurance company.

 

What is Personal Liability Coverage for Renters Insurance?

Personal liability protects you when you are liable for someone’s injury or loss of personal property. It helps cover medical costs and legal expenses. If someone brings a claim or lawsuit against you, it is recommended that you consult with your insurance agent.

Can my insurance company cancel my policy?

Insurance companies normally do not cancel policies mid-term. However, if you fail to make payment, or purchased insurance based on false information, the company can cancel your policy. The guidelines may differ based on state, but most insurance companies notify you 30 days before expiration on renew or non-renew.

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Alcohol Related Accidents and Insurance

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Regards to drinking related accidents and insurance, there are two major kinds of policies. First, Liquor Liability Insurance for stores or restaurant owners who serve alcohol. Second, SR-22 filing in an auto insurance for those who have DUI.

According to statistics from the U.S. Department of Transportation, there are about 16,000 accidents involving drunk driving.
Despite the high number of deaths and property loss in alcohol related accidents, many restaurants and businesses that serve or sell alcohol still seem to be unaware of the need for Liquor Liability Insurance. A business owner in LA was sued for selling alcohol to a minor who ended up in an auto accident. The business owner was held responsible and was ordered to pay $1 million in compensation.

The “Dram Shop” states that bars and restaurants can be held accountable if they serve alcohol to a minor or visibly intoxicated customer who causes an accident and harms others. According to a recent report by the Texas Restaurant Association, only 135 restaurants, or 45% of the 300 restaurants surveyed, had Liquor Liability Insurance. Considering that the survey was based on large-scale restaurants affiliated with the Restaurant Association, it would be no surprise to find small restaurants that sell alcohol overlooking the risk of liquor liability.

Insurance is all about establishing a reliable foundation for your business by preparing for accidents before they happen. Even with new restaurants and liquor stores on the rise, many seem to be unfamiliar of the type of protection that liquor liability provides and underestimate the importance obtaining one.

Liquor Liability is a type of business insurance that provides coverage for business that sell, serve or distribute alcohol.  It can help cover third party bodily injury and property damage that an intoxicated person causes after you sold or served alcohol. Examples of such accidents are DUI and assault and battery.

Businesses that need Liquor Liability Insurance include liquor wholesalers, restaurants, bars, taverns, nightclubs, entertainment establishments, convenience stores, beer specialty stores, and wine specialty stores. For small businesses, Liquor Liability coverage is usually available as an endorsement that you can add on to your current business general liability and property insurance. As for large-scale restaurants and beer wine stores, a separate Liquor Liability insurance plan can be purchased.  Most Liquor Liability Insurance covers $300,000 to $2,000,000 per case.

Another insurance term associated with alcohol related accidents is SR-22. If you receive a ticket or have an accident due to drunk driving, you will be asked to file an SR-22 from the DMV or another institution. Also known as “Certificate of Financial Responsibility” an SR-22 proves that you have auto coverage that meets the minimum limits required by state law. This document cannot be issued by an insurance agency and can only be issued by insurance companies recognized by the state. In case the insured cancels or no renews their auto policy, the insurance company that filed the SR-22 must immediately report a SR-26 to the DMV. Which will then be followed with the suspension of your driver’s license or fines.

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Credit Scores and Insurance Rates

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Did you know that your credit score affects your auto and home insurance rates? Nearly all major auto and home insurance companies now review your credit score when providing quotes. Let’s take a closer look at how your credit information is used and how it affects your insurance premium.

What is a credit score?

A credit score is a snapshot of your creditworthiness represented as a number. Credit information provided by a credit reporting agency is converted into scores based on various criteria which ranges from 300 to 850. In general, the higher the score, the more financial credibility you have.

How are credit scores used?

Most insurance companies use credit scores in the following two ways. First, as a reference to determine whether to approve or decline a quote. Second, as to determine the amount of your insurance rate. When calculating the rate, some companies put more importance on credits scores whereas some also review driving records and claim history.

 

What affects your credit score?

Below are the most common factors that impact credit scores.

Negative factors: bankruptcy, collection, mortgage, debt exemption

History of late payments: Number and frequency of past due payments.

Debt to credit ratio: How much debt do you have compared to your available credit?

Length of credit history

Homeownership: Whether a house is owned or leased

Credit inquiries: The number of applications for new accounts, such as recent housing loans, utility accounts or credit card

The number of credit cards issued: the number of major and co-branded credit cards that have been approved

The type of credits you are using: credit cards from major companies, store credit cards, finance company loans, etc.

 

Check your credit history!

There is a high possibility that an insurance company will check your credit score. Which means checking your credit score for its accuracy is important.  You can visit companies such as Equifax (www.equifax.com), Experian(www.experian.com), or Trans Union (www.transunion.com) and request a copy of your credit history.

In addition, if you contact the Federal Trade Commission (www.ftc.gov ) you can gain access to a  consumer brochure on credit reports. If you think an incorrect credit report has negatively affected your insurance rate, the insurance company should give the name of the National Credit Bureau that provided your credit report. You can request a copy of the credit report for free and dispute incorrect information.

 

 

How to maintain and/or improve credit score

First, it is most important to pay the debt on time without being late. Credit scores and records should be checked regularly and any issues that may negatively impact credit scores, should be dealt with. Negative information can last up to 7 years on credit reports, so it is important to steadily raise scores. It will require some time but, one to two years of consistent management will make a difference.

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Umbrella Insurance

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Some refer to insurance as an umbrella that protects you from accidents that are like sudden rain. Whether minor or major, there are a significant number of lawsuits in the U.S., holding the other accountable to receive compensation. In addition, the cost to hire a lawyer also varies greatly depending on the degree of skill and reputation.

Lawsuits regarding Liability Insurance claims are very common. Among those cases there are times when your auto and home insurance can’t provide enough compensation for the other party.  Which is why having an Umbrella insurance is necessary to protect your assets against lawsuit abuse.

Home insurance, auto insurance, and business insurance, each have a set amount of Liability Limit. By average, auto insurance holders have a liability limit of less than $100,000.  As for home insurance, the limit of $300,000 is general. In case of business insurance, most have a limit of around $1,000,000.  Imagine you are liable for the damages in an accident that requires a compensation amount higher than your limit. This is why it’s important to consult a professional on whether you have sufficient insurance coverage.

It’s impossible to predict the amount that you might be responsible for paying to the other party. In cases like this, an Umbrella Policy can be a good solution. It provides excess liability coverage above from what is provided by your auto, home or business insurance. Depending on the policy holder’s needs, umbrella insurance provides additional liability coverage from $1 million to $5 million.

Liability coverage compensates the injured person on expenses necessary for recovery, such as medical expenses, rehabilitation treatment expenses, and loss of income. Another important fact is that Liability covers the legal costs that you incur. In most cases, in the event of a huge accident, the average liability limit your home or auto insurance provides will not be enough to cover all of the expenses.

If the other party’s claim for damages exceeds the limit your insurance company can cover, the other party may go after your personal assets. Worst case, to satisfy the judgement, you may have to lose money and property by having to disclose your assets.

The solution to protect you in such difficult situations is to have an Umbrella insurance which is largely divided into Personal and Business. Umbrella insurance provides you a fairly large amount of additional liability coverage at a low price. In particular, Commercial Umbrella Insurance isn’t limited by different regions or locations unless there are legal restrictions. In addition, within the scope of coverage, Umbrella insurance can cover liability claims that is based on both parties’ agreement whether documented or implied in the contract.

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Frequently Asked Questions About Homeowners Insurance

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Q) Do I still need to keep my homeowner’s insurance after paying off my mortgage?

After you have paid off your mortgage and obtained full ownership of your home, it isn’t mandatory to have a home insurance. However, considering that a home is  your biggest asset, it’s only natural to continuously protect it. Homeowner’s insurance not only protects your property but also includes liability coverage which will provide coverage for when you are liable for a 3rd party’s injury.

Q) My mortgage payment includes home insurance premium. Who is responsible to choose the insurance company?

As the homeowner, you are responsible to chose your insurance carrier. The policy must be insured under your name. In order to protect their investment, mortgage companies sometimes include the cost of your home insurance along with the interest in your monthly payments. That way it will also have enough reserve to make annual insurance and tax payments. Therefore, it is up to the home owner to find the most competitive and high-quality insurance service provider. A good time to search for comparative home quotes is 2-3 weeks before renewal.

 

Q) Does home insurance cover against all perils and accidents?

Although slightly different among insurance companies, standard home insurance companies which make up about 80% of the home insurance market generally have a similar coverage. Home insurance coverage mainly consists of two parts. One is property, and the liability which covers casualties and property damage to others. Property coverage is divided into 4 detailed categories. First, dwelling second, other structures, third personal property and forth personal property outside of the home.

 

Q) Does home insurance cover damages from flood and earthquake?

Homeowners insurance policies normally do not cover perils like flood and earthquake. If you own a property that is exposed to flood or earthquake,  prone areas you should purchase a separate policy.

The extent of coverage varies by insurance companies and plans. However, below are the most commonly covered losses.

 

  • Fire or lightning
  • Windstorm or hail
  • Explosions
  • Riot or Civil Commotion
  • Aircraft
  • Vehicles
  • Smoke
  • Theft or Vandalism
  • Falling Objects

 

Q) Are there additional perils that are excluded from homeowners insurance?

To list a few more exclusions, intentional loss caused by lack of maintenance, loss due to war and, wear and tear are also excluded. In addition, the extra expenses that occur due to ordinance of law are not covered.

Q) How do I calculate dwelling coverage limits?

When determining the dwelling limit for your home, it is important to select an amount that is sufficient to rebuild the building in case of an accident rather than the minimum amount requested by your mortgage. Each insurance company has their own replacement cost estimate tools. This prevents the insured from under or over insuring the property.

 

Q) What is the difference between replacement cost and Actual Cash Value?

The dwelling coverage has two different calculation methods. Replacement Cost and Actual Cash Value.  Replacement cost covers the current cost required to replace/ repair the damage. Actual cash value equals the amount of repair minus the decrease in value of your property. Therefore, it is recommended to choose replacement cost when purchasing home insurance.

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