Does my insurance company have to pay the total replacement cost if I chose not to rebuild? I live in Michigan and my home was declared a total loss.
Total Comments: 2
Posted: Sun Dec 22, 2013 05:39 am Post Subject:
No they do not. It's written in the policy. Reason why is that insurance is really not to put the person in a better condition then they were before the loss. If you don't have the expense of rebuilding then you've just lost the value of the home... not the cost of rebuilding.
Posted: Thu Dec 26, 2013 09:33 pm Post Subject:
Tcope is correct. While your policy may provide for "replacement cost", unless you actually replace your lost items, your contract only provides for Actual Cash Value -- the replacement cost minus depreciation.
If you chose to rebuild the home, you could not construct a 3000 square home in exchange for a 1500 square foot home under the "replacement" definition. You can replace "like for llke" with the understanding that certain "old" elements are only replaceable with new ones.
Such would be the case with a 25" B&W TV from the 1960s. You won't find a new B&W TV in 2013, and you cannot replace a 25" screen with a 52" screen at the insurance company's expense (unless the ACV amount is sufficient to pay for it).
Posted: Sun Dec 22, 2013 05:39 am Post Subject:
No they do not. It's written in the policy. Reason why is that insurance is really not to put the person in a better condition then they were before the loss. If you don't have the expense of rebuilding then you've just lost the value of the home... not the cost of rebuilding.
Posted: Thu Dec 26, 2013 09:33 pm Post Subject:
Tcope is correct. While your policy may provide for "replacement cost", unless you actually replace your lost items, your contract only provides for Actual Cash Value -- the replacement cost minus depreciation.
If you chose to rebuild the home, you could not construct a 3000 square home in exchange for a 1500 square foot home under the "replacement" definition. You can replace "like for llke" with the understanding that certain "old" elements are only replaceable with new ones.
Such would be the case with a 25" B&W TV from the 1960s. You won't find a new B&W TV in 2013, and you cannot replace a 25" screen with a 52" screen at the insurance company's expense (unless the ACV amount is sufficient to pay for it).
Add your comment