melloInsurance

Serving our clients, Serving our community

Replacement Cost

What are the steps in filing a property claim?

There was an interesting and quirky video we watched the other day about how insurance is like the reverse lottery. It would be nice to win a real lottery and obtain millions of dollars. However, the opposite could occur and you are hit with a bolt of lightning or a tornado relocates your house or barn. These are acts of god that can happen to anyone at any time. Most recently, we were hit in our local area by a terrible hailstorm. Golf ball sized hail that damaged hundreds of homes and vehicles. A plow wind up north occured this weekend as well, which tore down tons of trees that landed on peoples cabins, vehicles and trailers. People didn’t ask for these things to happen, and there was nothing they could really do to prevent or prepare for it. Park your vehicle in the garage and hold on tight.  

Once the unfortunate event has subsided, it’s time to clean up the wreckage and file a claim. How do we do this exactly?

First, contact your insurance broker.
We will be able to take down the information of the claim, review your policy and deductibles with you, and explain what insurance information the adjuster is going to need when they phone to confirm the claim.

What information is my adjuster going to need?
The adjuster will need the following information (sometimes at a later date):

  • Date of Loss – this is important, as you are alotted a certain amount of time to start a claim. Usually 6 months to 1 year. It is always better to call in sooner, rather than later.
  • List of property that was damaged – if items were stolen or burnt up, the adjuster is going to need to know what items were lost or damaged.
  • Contact Information – Which is the best way the adjuster can reach out to you. Cell phone, Email, Text, Twitter, Pinterest, etc.
  • Policy number
  • Location of Loss – Where did the loss occur? Your home, cabin, rented dwelling…
  • Any other people who need to be notified – If there are other parties involved in the claim. Such as a neighbour, relative, etc. That might need to be contacted, this will help with tracking them down.
  • Details of the loss – The adjuster is going to ask what exactly happened at the time of the loss. Be as accurate as possible so they can make sure the coverage is available on your policy.
  • Police Authorities – If the police were involved in a theft call, or other claim situation. Please let the adjuster know the police file number.
  • Quotes from Contractors – If a building or dwelling was damaged, you may need quotes from contractors to assess how much damage actually occurred. They will be able to give you a replacement value. It is important to use reputable contractors, as these contractors may be the ones doing the work.

What happens next?
The adjuster will take down your statement and based on the type of claim, they will schedule a date to come assess the damage. If it is a claim where they do not need to be on the premises, they will review the policy wordings and the coverage you have purchased to see if the loss is something that is insured on your policy. (This is where you hope you purchased the best coverage and not the cheapest.)

…if claim requires construction
After they review the coverage, and coverage is approved, they will proceed with the claim. If construction needs to take place, they may suggest which quote to proceed with. You may have the option to fix the damage yourself, however, this will be negotiated with your adjuster when you submit the contractors quotes.

…if claim is regarding equipment or machinery
If it is a machinery claim, you may need to have a service department appraise the damage in their shop or on the scene. If coverage is available, you will be entitled to either Replacement Cost Coverage or Actual Cash Value (ACV) – based on the value, coverage and age of the unit. Actual cash value is calculated by Replacement Cost minus depreciation (as machinery will wear over time).

…if claim is regarding your personal belongings
If the claim is simply for the replacement of your belongings, the insurance company will require a list of items that were damaged or stolen. If coverage is available, they will then give you an Actual Cash Value (ACV) settlement for those damaged items. Once you purchase the new items to replace the damaged ones, you can submit the receipts for those items to be reimbursed for the replacement cost on those belongings. Generally you have 6 months from the date of loss, to replace your belongings. This time frame can be negotiated if it is impossible to replace them in that time. For example, your house burns down and construction is delayed, so you have no place to put your new appliances.

What about a vehicle or trailer claim?
SGI handles all auto claims as they are registrable units. Please contact them at 306-683-2100 or you can file an SGI eClaim. If you are simply fixing a windshield, you do not need to proceed through this claims service. Please contact our office. We always recommend carrying an auto pak policy to insure the unit while unlicensed and in storage.

Wrapping things up
Each claim situation is different, so it is hard to tell you how every situation will play out. Generally, once the claim is started, your adjuster is the main contact for your claim. If you ever run into any difficulty with the claim, please contact us; we are here for you to help you through the claims process. We want to make sure your claim is handled smoothly and professionally.

 

Do I qualify for Guaranteed Replacement Cost coverage on my home, and should I carry it if I do?

Buying a house will be one of the biggest decisions you will ever make. There are many questions and concerns when it comes to what house to buy. The age, the condition, renovations, yardwork, taxes, etc. Buying your insurance is one of the decisions that is usually left until the end, when you have already made an offer.

So how does this work?

We gather information on the house from you and possibly, the realtor. This information usually includes things like: Year built, square footage, type of construction (Frame, concrete, brick); heating, electrical, roofing, plumbing – any updates that were done to these 4; flooring, siding, and some other questions about the kitchen & bathrooms. With all these answered, we can use our replacement cost calculators to determine what the cost would be to rebuild your house. These calculators are updated quarterly by contractors and suppliers to make sure that the numbers are up to date with current labour and material costs.

Once we have your replacement value calculated, we use this information with our insurance carriers to see if we can obtain Guaranteed Replacement Cost coverage on your dwelling (GRC).  Depending on the year built and the updates that have been made, you may qualify for this coverage.

So why is this coverage important?

If a claim arises, perhaps a fire or flood, and your house has be torn down and rebuilt because of the extensive damage; you are going to have to rebuild a new house on your property. If your house was built in 1975, it will be hard to rebuild your house with materials and labour from 1975. So you are going to have to use today’s price; that being said, today’s prices can still vary from month to month.

Especially in Saskatchewan, our construction costs can vary, depending on which season we are in. So if you have to rebuild your house in the winter, the costs for labour, concrete, framing, etc., can be much higher as they are working in colder climates, which can cause delays or there are more costs to keep materials heated. So to rebuild an average house in summer might cost $350,000, however, that same house in winter, might cost closer to $375,000.
home-pak-2So how do we stay properly covered?  

By insuring to GRC, the insurance carrier guarantees to rebuild your house at the current costs of construction. For example, your house is insured for $350,000 and 6 months into your policy, your house burns down. When you get your quotes from your general contractors, they say to rebuild a similar house would cost $365,000 with the current materials and labour. Even though your policy looks like it is capped at $350,000, because you carry the GRC coverage, they will pay the full cost to rebuild of $365,000. This coverage just saved you $15,000.

So how do we make sure we keep this coverage in place?

Every 4-5 years, we are required by the insurance carrier to submit an updated evaluation of your dwelling. If you make any changes or updates to your dwelling, we need to re-calculate this evaluation and send it in to keep your value up to date. The insurance carrier, will also apply annual inflation protection to make sure they are keeping up with the increased costs year after year.

We want to make sure that your largest investment is properly looked after. This coverage will give you that peace of mind, that it is. If you have any questions about this coverage, please contact our offices.