Residential Property Insurance Claims
A residential property insurance claim can be a devastating and life-altering event for a policyholder, but for an insurer, it is routine business. An insurance claim is a business negotiation, and policyholders must approach the adjustment and settlement of their property insurance claim as they would any other business transaction involving a large investment. Few homeowners would risk the value of their home without substantial research and strict oversight, and an insurance claim should be treated no differently. A residential property claim involves restoring or replacing the property – both the structure and the personal property inside the dwelling – to pre-loss conditions within the limits of insurance purchased. Policyholders are faced with the tasks of investigating and documenting losses and learning the terms and conditions of insurance policies: the insurance coverages available, limitations on those coverages, deductibles, conditions precedent, and specific requirements necessary to make an insurance claim.
Typical residential property insurance policies offer:
“Ordinance” or “Law” which provides coverage—typically a percentage of the policy limits—in the event that building codes, enacted after a structure was built, require additional features not contained in the covered structure at the time of loss. Policyholders who purchase replacement cost coverage may expect that upgrades required by law are included in the coverage purchased, but some policies exclude these increased costs of repair.
“Additional Living Expense” pays the costs of living in a temporary location if a covered loss makes the damaged home unlivable. This could include hotel bills, rent, and other increased costs of living incurred while the home is being repaired or rebuilt. These benefits are usually subject to both time and monetary limitations.
If only part of a structure or its contents is to be repaired or replaced, issues arise if the repaired portion cannot blend with the remaining undamaged property. If repairs are obvious, they may diminish a property’s value. Although language varies with each particular policy, policyholders may have the right to demand that covered property is restored to a seamless pre-loss condition.