by woodworthfinancialmanagem » Tue Oct 12, 2010 04:21 pm
Criteria of "Replacement"
My elderly mother's house in NY suffered fire damage a few weeks ago, and I'm working with the adjuster; the dwelling can not be occupied until reconstruction of the top two floors and she's living in an apartment for the time being. After considerable HO research, and with help from this forum, we are down to a couple of crucial decesions: rebuilt or sell the dwelling as is. I believe that I have a good understanding of cruicial HO terms concerning this subject and the advantages of either a "depreciable holdback" for rebuilding or a "walk-away figure" if she opts to sell it as is. My question is what would HO 03 Loss of Settlement consider "rebuild or replacement" ? Does that mean she HAS to purchase another dwelling for the same rebuild cost (or more) in order to recapture her depreciation; can she decide to rent an apartment as replacement; can she buy an RV as a replacement? Your thoughts as insurance professionals?
Jim
My elderly mother's house in NY suffered fire damage a few weeks ago, and I'm working with the adjuster; the dwelling can not be occupied until reconstruction of the top two floors and she's living in an apartment for the time being. After considerable HO research, and with help from this forum, we are down to a couple of crucial decesions: rebuilt or sell the dwelling as is. I believe that I have a good understanding of cruicial HO terms concerning this subject and the advantages of either a "depreciable holdback" for rebuilding or a "walk-away figure" if she opts to sell it as is. My question is what would HO 03 Loss of Settlement consider "rebuild or replacement" ? Does that mean she HAS to purchase another dwelling for the same rebuild cost (or more) in order to recapture her depreciation; can she decide to rent an apartment as replacement; can she buy an RV as a replacement? Your thoughts as insurance professionals?
Jim
Posted: Tue Oct 12, 2010 04:55 pm Post Subject:
Furthermore, if she replaces the property, can the insurance adjuster holdback the 10% overhead, profit and sales tax? My guess is that they could.
Sorry about the multiple postings; I had trouble working the system
Posted: Tue Oct 12, 2010 06:40 pm Post Subject:
10% overhead, profit and sales tax
These items are found in the building contractor's estimate and are part of their total cost for repairs. It would be included in the insurer's depreciation holdback/limit of liability.
Posted: Wed Oct 13, 2010 09:03 am Post Subject:
It would be included in the insurer's depreciation holdback/limit of liability.
Aren't such things explained in the insurance agreement?
I thought there's one clause that describes everything associated with 'depreciation'.
Posted: Thu Oct 14, 2010 06:46 am Post Subject:
"Depreciation" is sort of a nebulous term. It's what creates most of the tension between insureds and insurers when a claim occurs. You are not likely to find any definitive discussion of it in an insurance contract for the obvious reason that it would lock the insurance company into that single means of handling a claim.
But the word depreciation is liable to be found several times in any contract to describe what an insured will not get.
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