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Rebuilding After Your Loss | Settlement of Your Insurance Claim

Rebuilding After Your Loss
Settlement of Your Insurance Claim
Written by Tamara Embry of Smith-Embry Insurance Associates, Inc.

image1Once your loss has been reported to your insurance carrier and an adjuster has assessed the damage, an evaluation of your loss will be sent to the carrier for settlement of your claim. Depending upon the number of losses in your geographical area, it may take some time before the adjuster arrives on your premises and before your claims process begins. Do not hesitate to contact your assigned claims adjuster or insurance agent for help in settling your claim or getting an update on the settlement of your claim.

When your loss has been evaluated, you should receive a letter with a copy of the documentation used in the evaluation of your claim. If the damaged structure is insured for replacement cost, you initially will receive a check for the gross loss, less your deductible and less depreciation. The letter should advise the amount of time you have to repair or rebuild the damaged structure for reimbursement of the held-back depreciation. Should the repair or rebuilding take longer than the amount of time provided, contact your assigned claims adjuster as soon as possible to ask for any extension available.

Once the repairs or replacement of the damaged structure has been completed, you must submit repair receipts, invoices, or any other form of documentation to the insurance company to make claim for the held-back depreciation.

If the damaged structure is a total loss, insured for replacement cost and you do not plan to rebuild back to size and/or scope of the original structure, your claim is settled for the gross loss, less your deductible and deprecation, and the insurance carrier will not reimburse the held-back depreciation.

If the damaged structure is insured for actual cash value, the insurance company will settle your claim for actual cash value less depreciation, and you cannot make claim to the depreciation once repairs or replacement have been completed. Actual cash value is defined as the smallest of 1) the cost to repair or replace the property with materials of like kind and quality to the extent practical or 2) the actual cash value of the property at the time of the loss with the exception of mobile homes insured for actual cash value which also include 3) the difference in the actual cash value just before the loss and the actual cash value just after the loss.

Whether you have structures requiring repair or replacement, or whether they are insured for replacement cost or actual cash value, your claims adjuster should provide you with any information requested and help in settling your claim. Although your insurance agent is not directly involved in the claims settlement process, you should feel free to contact him or her for any assistance you feel is needed.

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Rebuilding After Your Loss | Making Sure You Have the Correct Coverage

Rebuilding After Your Loss

Making Sure You Have the Correct Coverage
Written by Tamara Embry of Smith-Embry Insurance Associates, Inc.

image2Having proper insurance coverage is essential and some people find out after it’s too late, they were not properly insured. If you own a farm, it is important to be sure you have a Farmowner’s policy and not a Homeowner’s policy. A Homeowner’s policy will provide coverage for your dwelling, but may not provide coverage for your farm structures or equipment. You should have your agent explain your insurance in detail.

With a Homeowner’s policy, your agent may advise your farm structures, i.e., barn, storage building, run-ins, are insured as “appurtenant structures” to the dwelling. However, if you use those structures for livestock or farm equipment, they are no longer considered appurtenant to your dwelling. Appurtenant structures are usually detached garages or sheds but may not fall under the definition of appurtenant structures if they house any equipment related to your “farm”. The limit for “appurtenant structures”, which is usually 10% of the insured limit on your dwelling, may not be enough to fully replace your farm structures.

A Farmowner’s policy will provide coverage for your dwelling, farm structures, fencing and farm equipment as long as they are scheduled on the policy. This type of policy provides the best coverage for someone owning a farm. It can also include commercial liability for any of your commercial operations such as horse boarding, training, lessons or livestock sales. A Homeowner’s policy will only provide your premises and personal liability.

Next, be sure your policy provides replacement cost of your dwelling and farm structures rather than actual cash value. Most insurance carriers have an 80% co-insurance clause, meaning the structure(s) must be insured within 80% of the replacement cost at the time of the loss for the policy to provide full replacement cost. Your agent should run new replacement cost estimates every two years at the minimum, to be sure you are insured properly. Some carriers will increase the insured limit of your structures at renewal each year as an inflation guard.

Farm equipment, if scheduled on your policy, will only be covered for actual cash image1value so be sure to have your agent look at the depreciation at renewal each year. For farm items valued at $2,500 or less, you can “bundle” as unscheduled farm personal property, such as tack and grooming equipment or small tools & supplies for a total insured limit.

Your agent should be happy to explain your coverage in detail to you and answer any questions you have. If you don’t feel satisfied with any of the information provided by your agent, you can always contact another agency to review your policy and advise whether you are covered properly. You should always feel confident you are insured properly!

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