Claim Time: How is RC Calculated?

[Milkman1265]

Any one experience in claims?

If you purchased a 100% RC policy for an insured based on MSB estimator.

Now the house burns to a crisp and needs to be replaced. How does the adjuster actually estimate the cost?

If they can not figure out the material that was used in the home? Adjuster uses standard material whereas the insure is saying they had marble floors and granite tops.

How does one argue what was back to the condition they were before the lost? or Argue that they had enough coverage at the time?

 

[Indiana_Adam]

I've never thought about that before.

If the house burns to the ground, the company is on the hook for the Coverage A amount, regardless of the materials.

If the insured had marble floors and granite tops, they should have told the agent or the agent should have asked, instead of assuming economy/builder grade.

A good safety measure could be having each client sign the printed MSB sheet. Then they can't claim the agent missed their designer grade kitchen.

 

[AdvisorsIns]

Keep photos of the home interior and exterior. Do a detailed RC estimate. Keep a copy of the appraisal. Most companies do an interior inspection on high value homes over 750k. I would say it is the agents responsibility and would open up an e&o claim if you underinsured and some of that data was available or sitting in your files. So if you get the info you must disclose to the carrier. If you actually insured all the homes you insured detail for detail you would have best insured homes in town but would lose the business quickly on price if the client was not fully aware of his policy details. The cost of their insurance I bet with you would be 20% higher than anyone else in town. Your competitors are not underwriting that way.

 

[Milkman1265]

And also the MSB and RC Estimator for each carrier is different.

I am asking specifically about guaranteed RC endorsement. where the carrier will replace your home even if it cost more than the coverage A you have.

If you insure a home for 500k, based on the carrier's estimate, then it burns to the ground and the client now say the material on the adjuster's report is not the same as he has.

Does the insurer go back to the MSB data or take the word/pictures of the insured as proof?

I am just thinking about the this endorsement in detail and it doesnt seem like a situation where the carrier is in favor. MSB estimates go up every year, i've seen it go from 150/sqft to 215/sqft now, its only going to go up and the carrier has to "guaranteed" the replacement.


And as AdvisorIns said,you would lose to every single competitor as you will always be more expensive.

 

[AdvisorsIns]

What companies are offering guaranteed replacement cost? I have one carrier that will go to 200%. But iv never seen guaranteed. Not on your average carriers.

 

[nyc2phi]

What companies are offering guaranteed replacement cost? I have one carrier that will go to 200%. But iv never seen guaranteed. Not on your average carriers.

You're in NC right? You don't come across Erie's home product much?

 

[Milkman1265]

I networked with a public adjuster company out in NJ, picking his brain on the process of filing claims and see if he can provide any insights.

Will report back here, if anyone is interested.

 

[AdvisorsIns]

I'm SC and do very little in NC

 

[djs]

Yeah, guaranteed replacement cost has gone out the window in most places, actually because the agents abused it to much. They would undervalue homes to get the premium to the point the client would buy.....

Normally in these cases (no experience specifically with this type of issue) the carrier will accept 'standard' as a starting point. You had marble floors? Show me pictures, receipts, remnants from the fire, something to prove it.

As long as the claim is reasonable, then okay. Start going above reasonable (i.e., gold plated kitchen cabinets, whatever), then they will probably want more and more proof.

At some point, they will probably come back with some weasel clause about not being properly insured at policy inception, allowing them to only insure up to the dwelling value and leaving the insured on the hook for co-insurance since they claimed the value existed.

Dan

 

[Indiana_Adam]

I don't believe you will lose to every competitor. You need to be thorough when you sit down with them and go over the MSB and how you came to that Coverage A amount. If need be, quote the lower dwelling to compare apples to apples and show them your rating, but explain why it needs to be written with a higher Coverage A. Explain how and when major coverages kick in.

Cross sell them auto, life, and disability and it further decreases your chances of losing that client anytime soon.

When I was captive, the company's retention rate was around 95% if the client had 3 or more products with us. My guess is that holds true with any agency as well.