Recently, one of our contractors learned a very expensive lesson. They primarily do restoration work from hail and wind damage. They had just gotten done completing work on 3 separate properties, with one owner. It was covered under the same claim, which happened to be an Actual Cash Value only policy. Nowhere on the paperwork did it state that it was an ACV only policy. This ended up costing the contractor over $6,500.00 out of their own pocket because of what is called non-recoverable depreciation. That is where the policy only pays the homeowner the ACV, and the depreciation is kept by the insurance company.
Most homeowners don’t know anything about this when they purchase their policy. Again, nowhere in the scope of the claim did it say anything about ACV only. This isn’t to say that they will usually be forthcoming about this but not always, BUYER BEWARE.
Our contractor asked us what he could have done different, and what to do in the future so it doesn’t happen again. It’s actually pretty simple, and it can all be taken care of when your sales people are in the home. They should sit with the homeowner when they make the call to the insurance company to file the claim, and put the phone on speaker. There should be a checklist that the homeowner asks the insurance agent. Here are some of the questions that should be asked:
1. Does my policy cover the entire cost to repair my property?
2. Does my policy cover code upgrades?
3. How much is my deductible?
4. Is the depreciation recoverable or non-recoverable?
5. Do I have a time limit to make my repairs?
If you have any other questions that you currently have the homeowner ask the insurance company or that you think would be helpful, please let us know. We would like to pass them along to our network of contractors.