- 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.

1. REBUILD OR REPAIR
YOUR HOME AFTER
A HOUSE FIRE?

2. If your home has 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 home should 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, for example,
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 the cost 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
policies have 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 compensates you
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 value coverage
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 of your 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
TO REPAIR OR
REPLACE A HOME
AFTER A HOUSE
FIRE?

12. There is no single 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 demonstrate the 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 the home
insurance company has greater
evidence and stronger will, then
they could force homeowners to
repair or rebuild your home.

15. Ifyouneedhelpwithadisputeor
disagreementwithyourinsuranceclaim,
contactaqualifiedPublicAdjusterfora
freeconsultation.