As we discussed in my last post, all policies are not created equal. If you have a trusted agent, they have already been in contact with you to let you know that everything is going to be OK and they will be with you for every step of the process. They will refer you to the company adjuster. That’s not passing the buck, it’s just the way the system works. If your agent isn’t offering to be there to hold your hand, make them. They earn their money by being your agent, not just signing you up. Any time you don’t feel comfortable with your adjuster, you should be able to call your agent to get an explanation or further assistance.
So what do you need to know that a less than stellar agent may neglect to tell you:
1. If your home is declared a total loss, you do not need to rebuild your house. If you have Replacement Value Insurance, you can take the check and go to South America with it if you would like.
If you decide to rebuild, you do not have to re-build “As Was”.
If your company has said that you have only a partial loss, but you feel that it should be totaled, you should seek a trusted General Contractor who is independent of your insurance company to help you make your argument. At this stage, they can possibly save you attorney’s fees.
2. You do not need to use the Contractors that the insurance company recommends, if you choose to rebuild. It’s your money and you can use it any way you see fit to get the most value for your investment. Some adjusters have special arrangements with General Contractors in their area. These arrangements are not necessarily to your benefit. As soon as the insurance company declares that your home is a total loss, that “pot” of money for replacement of your structure can be spent however you choose. Speak with your agent about the rules in your policy for not spending it all.
3. Be honest with your trusted agent. The ONLY reason not to be honest with your agent is if you burned, bombed, or flooded your home on purpose. Then they will turn you in because you should go to jail. Short of that, if you tell them what you are concerned about, they’ll find a way to help you. Remember rule #1 from Insurance Shopping.
4. You have different “pots” of money in your policy. The Structure and the Contents are obvious. What most people don’t know is that they have a Temporary Living Fund. This money is separate from the contents and should be enough to take care of your immediate needs as well as the necessities you require to live normally until your home is ready to move back into. If you choose to rent linens, towels, cooking utensils, etc, that will all go back to the rental company when you move in your home and buy your own. Your insurance adjuster will probably allow you to purchase these items out of that Temporary Fund so that you can keep the items after you move into your permanent home. Depending on your policy and adjuster, these items could include beds and other furniture. The adjuster might be able to show that buying these items is less expensive than renting them. If you’ve already rented, for the immediate, you can still purchase your own things out of the Temporary Fund. You’re going to be there for awhile. Get comfortable.
5. Be prepared to be in your temporary situation for at least 9-10 months. That may be something that you don’t want to hear, so your agent, adjuster, and possibly building contractor will not tell you. Get comfortable in your temporary abode and don’t feel guilty about it. You’re life has enough added stress now. Your Temporary Fund will probably cover you for at least a year.
6. If you decide to rebuild, try to find a Design-Build General Contractor or Project Management style Contractor. They may draw the plans for you or they have relationships with cost effective Residential Designers or Architects. More importantly, they will help insure that the home you design gives you the most value for your investment. In other words, it’s a cost effective design. They know the most cost effective engineers to use for your structural calculations. That type of contractor can help you design a home that is cost effective to build and efficient to cool and heat. They will charge an overhead percentage to help with the design and build and oversee the best team for you and work as your advocate.
If you’re interested in learning more about the differences between Design-Build firms and Fixed Bid Contractors, see our blog Why Design Build.
Thank you again Kenny Riley of Country Financial Insurance for proofing my blog for accuracy. Kenny did not write this post and had no control over it’s contents other than to ensure that it is accurate.