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Rebuild or repair your home after a house fire? | ClaimsMate
- Homeowners who experience a house fire face important decisions about whether to rebuild or repair their home. - State laws provide different rights to homeowners depending on location, such as allowing policyholders in California to use insurance funds to buy a replacement home instead of rebuilding. - Homeowners insurance policies cover either replacement cost value (RCV) or actual cash value (ACV), with RCV providing additional compensation by not accounting for depreciation of the home's materials. - There is no single authority that decides whether to repair or rebuild a home after a fire; the homeowner or insurance company that presents the strongest evidence and will can influence the outcome.
Rebuild or repair your home after a house fire? | ClaimsMate
- 1. REBUILD OR REPAIR YOURHOME AFTER A HOUSE FIRE?
- 2. If your homehas been damaged or destroyed in a house fire, then you have many important decisions to make. One of the biggest decisions is whether to rebuild or repair your home.
- 3. When the homeshould be considered a total loss, the homeowner no longer needs to prove the value of the home, such as Actual Cash Value (ACV), and the insurer must pay the full policy limit for the dwelling. STATE LAWS PROTECT YOU DURING INSURANCE CLAIMS
- 4. In California, forexample, policyholders now have the right to collect all benefits that would have covered rebuilding your destroyed home then use those benefits to buy a replacement home. Insurance companies in California must pay the same amount they would owe to rebuild your home and let you use those funds to buy a home instead.
- 5. In other states,things can be less clear. Many fire damage insurance claim disputes arise from the repair versus replacement issue. Insurers push for the cheapest option, while homeowners want the option that’s best for them.
- 6. To understand thecost of repairing or replacing your home, it helps to understand the difference between replacement cost value and actual cash value. REPLACEMENT COST VALUE VERSUS ACTUAL CASH VALUE
- 7. All homeowners insurance policieshave either replacement cost value (RCV) or actual cash value (ACV) coverage. RCV plans are more expensive and can provide additional compensation after a loss.
- 8. RCV coverage compensatesyou based on the dollar amount it would cost to replace or repair your home with a home similar to the kind and quality of the home you lost. The insurance company does not apply depreciation to these costs because you need brand new materials to calculate costs. REPLACEMENT COST VALUE:
- 9. Actual cash valuecoverage compensates you based on the fair market value of your home on the day before the loss. In other words, it’s the actual value of your home based on the price a willing buyer would have paid a willing seller. Some homeowners insurance policies have other definitions (like RCV minus depreciation). ACTUAL CASH VALUE:
- 10. The ACV ofyour home will not exceed the RCV. ACV includes the depreciation of your home and its building materials, while RCV does not.
- 11. SO WHO DECIDES TOREPAIR OR REPLACE A HOME AFTER A HOUSE FIRE?
- 12. There is nosingle authority deciding to repair or replace a home after a house fire. With most insurance claims, it comes down to whichever party presents the best evidence in favor of a particular decision.
- 13. If you demonstratethe greatest will and present the most compelling evidence, for example, then you should be able to repair or rebuild your home (whichever is in your best interest).
- 14. Alternatively, if thehome insurance company has greater evidence and stronger will, then they could force homeowners to repair or rebuild your home.
- 15.