Homeowners insurance is an absolute necessity even if it is not required by law. Most mortgage companies will require that you maintain your policy throughout the life of a loan. Beyond that it can save you big money if your home experiences damage.  But how much are you owed? How are you paid? How do you file an insurance claim for minor damage? How do you file a total loss insurance claim? The insurance professionals at Streamline Insurance are here to help you navigate the frustrating world of insurance claims. 

How Much Are You Owed In An Insurance Claim?

When selecting your insurance policies it is important to understand the types of coverage available. If you file a damage or total loss insurance claim the coverage type you have will make a big difference.  Each variation will greatly affect the amount of money you are entitled to. Typically, there are three types of coverage available: actual cash value, replacement cost, and guaranteed replacement cost. Let’s look at these in closer detail. 

Actual Cash Value 

Actual cash value covers how much your home and the items in it are actually worth. It is not how much you paid for your property and belongings. It is the value of the home plus the value of your belongings after deducting for depreciation. If you paid $1,000 for a belonging and after use it’s now worth $500 you would be paid $500. This would be the case even if replacing the item would cost $1000. 

Replacement cost 

Replacement value policies cover the value of your home and belongings without the deduction for depreciation. With this level of coverage you would be able to repair or rebuild your home up to the original value. If you paid $1,000 for a belonging and after use it’s now worth $500 you would be paid $1,000. This works the same if the item increased in value rather than decreased. If you paid $1,000 for a belonging and after use it’s now worth $1,200, you would be paid $1,000.

Guaranteed Replacement Cost/Value 

If you need to file a total loss insurance claim you dont just want the cost of your home. You also want the cost of rebuilding your home. This is the most comprehensive policy. This policy pays for whatever it costs to repair or rebuild your home even if it's more than your original costs. This policy allows for inflation and/or construction costs if needed. However, there is a limit. The limit is typically 20 percent to 25 percent higher than the originally insured belonging.If you paid $1,000 for a belonging and after use it’s now worth $500, you would be paid $1,000. If you paid $1,000 for a belonging and after use it’s now worth $1,200 you would be paid $1,200. 

How Are Insurance Claims Paid?

Once your deductible has been met you will be issued a check for your claim. Each insurer has different procedures for paying homeowners. An insurance claim check may be made out to different people. Payment for damage or a total loss insurance claim may need to be paid to several sources. If you are the sole owner of the property you will receive a check for the entirety of your claim. 

Things are different if you have a mortgage. If you have a mortgage, a claim check may also be issued to the mortgage company. This is especially true in the case of total loss insurance claims. Each mortgage company has different procedures during the insurance claim process. When your insurance claim check is issued to a mortgage company you may need to work with them in order to access the cash. The lender may deposit the money into an escrow account for you to withdraw from as repairs are made. If you own a coop, condo, or an apartment the insurance claim check may be issued to the management company. 

Final Thoughts

Knowing your insurance policy is the first step in making sure you have the coverage you need. Working with a professional insurance agent or insurance broker will help you understand the ins-and-outs of your coverage. With the right policy in place, you can rest easy. Should you ever need to file a damage or total loss insurance claim we can help. The team at Streamline Insurance is to make sure that you have the right coverage in place before a claim. Then, we help you through the entire claim process to make sure you get what you need to rebuild. If you have questions about your current policy or if you would like to get a quote, contact us. We are here to help you with anything you need.