How is the value of insurance repairs to your home determined?
If you read our prior ARES blog articles, you know the importance of keeping good notes during an insurance claim. If you watched the accompanying ARES videos, you have an understanding of the difference between actual cash and replacement cost value (ACV vs. RCV).
When you file a claim, some of the key questions are:
Is my claim covered by my policy, or is it specifically excluded?
What coverage limitations do I have?
How is the scope and cost of repairs to my home determined?
As a refresher, Replacement Cost Value (RCV) for a homeowner insurance policy, according to insurer State Farm,
“Is the cost necessary to repair or replace your entire home. When you insure your home for its estimated replacement cost, your insurer will reimburse you (subject to your policy limits) for the cost of rebuilding or repairing your home, based on the size and structure of the home that was lost or damaged.”
If you have kept good notes and have confirmed what type of policy you have for your home, how does is the scope and cost of repairs to your home determined during an insurance claim? This is an excellent question. According to the same article from State Farm as referenced above, the insurance company states,
“The most appropriate way to estimate the replacement cost of your home is to hire a building contractor or other building reconstruction professional to produce a detailed replacement cost estimate.”
The expectation of the customer should be that their home will be restored to its pre-loss conditions with materials of like kind and quality. We call this The Standard, and everyone involved in the claims process should be working towards that goal.
Estimating Property Insurance Damages
For property insurance claims, the estimating software Xactimate is often utilized to provide some standardization for costs. The scope of work necessary to perform the work is subject to input from a qualified contractor that will be producing the work. While it is often helpful to have a contractor present their scope, supporting documentation, and cost in this format, it is not the only way to estimate an insurance claim.
Xactware notes that its software is not intended to be the final say in any claims cost assessment as their,
“Published price list is not intended to account for or provide costs for every potential item. Xactimate, therefore, provides users the full capability to create and/ or modify any costs as needed to match the conditions of the specific job or their company.”
Whether your policy is ACV or RCV, the base price for repairing your property to its pre-loss condition should reflect current labor and material rates relevant to the local market. Homeowners should be looking to hire the local contractor who is best able to assist them to THOROUGHLY document the details of damages to their structure (data capture) and translate that information into an estimate with ACCURATELY reflects the scope of work that needs to be completed (data input).
A Quality Scope = Thorough Data Capture + Accurate Data Input
There will be a few phases this process goes through before an agreed-upon scope can be reached. The attached graphic (DYOJO Scoping) helps to outline which step the estimate is in so that all parties can be clearer on what needs to be completed in order to move closer to the end goal of a restored structure.
Four Tips for Avoiding Insurance Claims Horror Stories:
Know what you purchased and review it at least annually with your local insurance agent
Understand the coverage that you purchased and how your policy will act in the event of a claim
If you experience damages to your home or business, reach out to an experienced insurance claims contractor.
Refer to our prior blog entry and video regarding Insurance Claims Questions
Our team at ARES Restoration takes pride in being a part of our local community and enjoys the opportunity to serve our clients in Pierce County. Water and fire damage leaves home and business owners with the feeling of losing control of their environment. At ARES, our motto is, “Giving You Back Your Home,” as we work to help you to thoroughly document the extent of your losses so that we can accurately estimate the necessary repairs and communicate those items to your insurance company.
Insurance Claims Experts. ARES specializes in helping you navigate the nuanced process of insurance claims repairs.
FREE In-Home Consultations. Our ARES team looks forward to meeting with you to discuss the unique needs of your restoration project.
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