1. Most HO policies carry a mortgagee clause requiring them to name the lender as a loss payee on the check. This is required by law and the lender determines how it will endorse and/or disperse funds to ensure their investment is restored.
2. Many carriers offer extended replacement cost coverage by endorsement than extends Coverage A (your primary building coverage) up to 175% with a FEMA trigger for major disaster – I believe that trigger has already been pulled by President Bush. Otherwise the typical extended replacement coverage is 135% of Coverage A.
3. Additionally, by endorsement, many policies offer inflation protection which prorates all your policy limits up each month until your next renewal.
4. For a home destroyed by fire, the Actual Cash Value is determined by market value (RE Appraisal minus the value of the land) or a rebuild contractors estimate less depreciation, which ever is greater.
5. Depreciation (for all losses incl minor repairs) can only be taken on building materials subject to normal repair or replacement during the useful life of the home e.g cannot depreciate the framing, rough plumbing, etc.)
6. You can rebuild elsewhere are still be entitled to Replacement Cost Coverage.
7. Most policies offer coverage for hotel, additional expense for up to 2 weeks for a civil authority action (e.g. evacuation) many times without taking a deductible.
8. Additional Living Expense coverage has been extended on most policies to 24 months and also gives you the option of electing a Fair Rental Value Option (FRV) that allows you to take payment based on the fair rental market value of your home without the need to submit any documentation/receipts. Recommended if you are staying with family or friends vs. when you are incurring a temp rental expense or hotel.
9. Don’t hire the services of a Public Adjuster (PA) who will take 8-15% of your claim dollars doing the same thing your own assigned adjuster does for free. Give your insurance company a chance first and hire a PA when and if you have issues with your insurance company.
10. Stick with local contractors with long standing reputations for the rebuild of your home.
11. Most polices also provide an additional 5% above and beyond the Coverage A (building) for debris removal, 10% for building code upgrade requirements and 5% for trees, shrubs and plants. Ask your insurance company to provide all of these limits in writing with proration for inflation (if applicable.) Also request a certified copy of your policy on day 1. These requests alone will serve to convey the message that you intend to claim all benefits available to you.
For Example, a policy with $500K in Coverage A would actually have $875K after the applying the extented replacement cost coverage now triggered by FEMA. Additional to this would be another $43,750.00 for debris removal, $87,500.00 for code upgrades, and $43,750 for trees, shrubs and plants.
Finally, most policies give a straight 10% for appurtenant structures (detached garages, sheds, barns, fencing, walls, etc.) In this example, it would total $50K.
Total available coverage excluding personal property and additional living expense = $1,100,000.00
