Insurance Education

[ECP]

With insurance, the whole point is to be put back in the same position you were in before the loss and you are not supposed to profit from the loss. With that being said you are required to rebuild the home after the loss (there are exceptions, Chubb has a cash out option).Your rises in insurance premiums at $150 per year are negligible (thats only $12.50 per month that your mortgage is increasing if you have it escrowed). It is difficult to understand at this day and time because you have never seen a loss, but trust me you want a replacement cost policy and odds are your mortgage company will require it. When I update my client's info with the mortgage companies that specifically ask if its a replacement cost policy, if not they will force place coverage.

As to the mortgage company only requiring you to purchase for the loan amount; that's because they don't care about you as a customer, they only care that if you have a total loss your loans paid for, they could careless that your now homeless.

i know nothing about the insurance in your state as it differs from state to state, but there is a bill in Florida, that is going to require consumers to provide proof that they are applying the funds that they filed a claim for to fix the damage to the home, or they will no longer get the payments from the carrier. Also, in Florida (and I assume its the same everywhere), if you insure the home under 80% of the replacement cost AT THE TIME OF THE LOSS (this is why you need the inflation factor in your policy which increases the dwelling coverage every year) you have to share the loss with the insurance company, above and beyond the deductible and depending on the amount of the loss and the difference in RC to the actual insured value, it can and will get very expensive very quickly and you will be very sorry you didn't cough up an extra $150 per year.

Here is the coinsurance Formula: (Did / Should) x Loss - Deductible = Payment (from the carrier). With this formula if you were to insure your home to $150,000 when it should have been insured to $200,000 and you had a $100,000 fire loss, you would only get $74,000 of the $100,000.

By the way, be happy you don't live in Florida, I know of only 3 companies in the entire state writing new business (only 49 companies), that didn't have rate increases, most increases have been in the $400 - $800 per year range.

I understand you want to save money now and we all do, but insurance is not something I would cut corners on, take it from professionals that have seen people make huge mistakes and regret it. You may get away with cutting corners now, but if it catches up to you, you can end up paying a lot more.
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Actually, even if storms hit anywhere in the world costs rise here. for many reasons, but specifically because the reinsurance companies will raise their rates worldwide, which will affect us. I have heard that 2011 was one of the worst years so far in history for the insurance industry due to the number of catastrophes worldwide, but also here in the US.

I worked for Chubb as a property adjuster and I am not aware of any cash out option. They will typically pay out RCV up front on smaller losses but on a larger total loss holdback will be taken until something similar to the original home was rebuilt. Now of course this varies by region or zone, but the bottom line is something must be built in order to receive 100% of the funds.

 

[joshb]

I worked for Chubb as a property adjuster and I am not aware of any cash out option. They will typically pay out RCV up front on smaller losses but on a larger total loss holdback will be taken until something similar to the original home was rebuilt. Now of course this varies by region or zone, but the bottom line is something must be built in order to receive 100% of the funds.

They do have a cash out option here in Florida. Send me a pm with your email address and I'll forward you their "Masterpiece" Brochure. It lists several perks of their policy, that being one of them.

Actually here it is directly off their website: Chubb Personal Lines: The Chubb Tradition
Cash Settlement: In the event of a covered total loss, if you decide not to rebuild or to rebuild at another location, Chubb offers a cash settlement, up to your policy limit. The choice is yours.

 

[ECP]

Interesting, I personally never came across that language in the policy for the various states I handled. But of course I did not handle the east cost or Florida.