Factors That Determine Your Final Settlement Amount

Factors that Determine Your Final Settlement Amount

The major determinant of your settlement is the Type of Policy and coverage you have in the first place. That's why it's essential you make sure you have the right insurance coverage in place before you need to make a claim. Here are the major types of policies:

Replacement Cost and Actual Cash Value

A replacement cost policy provides you with the dollar amount needed to replace an item with one that is similar in kind and quality without deducting for depreciation. Actual Cash Value policies pay the amount needed to replace the item minus depreciation.

Extended and Guaranteed Replacement Cost

If your home is damaged beyond repair, a typical homeowners insurance policy will pay to replace it up to the limits of the policy. If the value of your insurance policy has kept up with increase in local building costs, a similar dwelling can generally be built for an amount within the policy limits.

Extended Replacement Cost Policy

With an extended replacement cost policy your insurer will pay a certain percentage over the limit to rebuild your home, 20 % or more, depending on the insurer, so if building costs go up suddenly, you have extra funds to cover the bill. However, the policy will not pay for more expensive materials than those originally used.

Mobile Home, Stated Amount

If you own a mobile home, you may have a stated amount policy and this means that the maxium amount you may receive is the sum you agreed to when the policy was issued. If you opt for this kind of policy, update it annually to make sure the amount will cover the cost of replacing your mobile home.

Limits And Disputes On Your Home Insurance Policy

Most homeowners insurance companies recommend that a dwelling be insured for 100% of its replacement costs. You still may not be fully covered if, for example, you have made significant improvements on your house and you have not informed your insurance company of the changes.

Disputes

If you have a disagreement about the way a claim is being handled, contact your insurance company. Call or write to the adjuster as new developments come up. Remember that good, clear communication and honesty are the components you and your adjuster will need to become an effective team. If you are not satisfied with how things are going between you and your adjuster, contact the adjuster's supervisor and discuss the situation. Sometimes your insurance agent or broker can intervene.

Make sure you have figures to back up your claim for more money. Complaints often arise from misunderstandings or miscommunication. If you disagree with the adjuster's estimate, ask the company to tell you why.

If you still disagree after this, you can use a process called "appraisal." If you and your insurance company still disagree, your policy allows for the independent appraisal of the loss. In this case, you and your insurance company hire independent appraisers who choose a mediator. The decision of any two of these three people is binding. You and your insurance company each pay for your appraiser and share the other costs. The appraisal process only handles disputes over the amount paid. It does not cover settling disputes about coverage or cause of loss. However, disputes rarely get to this stage.

Some insurance companies settle disputes in a slightly different way, through a process called arbitration. When this happens, a neutral arbiter hears the arguments of both sides and then makes a final decision.

And if you still cannot resolve the dispute, you can file a written complaint with your state's Department of Insurance.

Exceptions To Your Home Insurance Policy

If your insurance company needs more time to make a decision, it can take 45 business days, provided if it has sent you a notice explaining the delay.

If your insurance company suspects arson, it has 30 days after receiving all the required paperwork to either accept or reject a claim. After a major natural disaster, your insurance company may have the right to an extra 15 days before making a decision.

Surplus line carriers have 20 days to pay your claim if agreeing to do so.

If your insurance company takes too long to pay, it is liable to pay your attorney fees plus damages equal to 18 % of your claim if you sue and win. In an insurance claim lawsuit, the insurance company has the burden of proving it was not obligated to pay.