When you talk to homeowners in Oklahoma who have been the repeated victim of violent storms, tornados and flooding, they share one thing in common: they all wish they had done a better job of documenting their possessions within the home, before they had to make an insurance claim.
That’s something we never really think of as property owners. We don’t start the day imagining that a tree is going to fall on our new car, or that we’ll answer an urgent call from a neighbor telling us that our garage and home has flooded. It is also natural to assume that the property you lose as a result of a natural disaster (tornado, flood, hail) or due to break and enter theft will be replaced by the insurance company.
After all, isn’t that way you pay your premiums every month?
At Compton Law Firm, we hear personal stories from our clients every week that demonstrate insurance companies have changed. Whether you are with a major A-Carrier or national insurer, or a medium sized agency, their approach to compensating insured clients for loss follows the same profitability model.
You as their customer, are only profitable if you do not make a claim. And if you do make a claim, it comes down to minimizing their loss; the insurance company is ready with a team of lawyers to make sure you are compensated at the lowest possible rate for your loss.
When homeowners have experienced a catastrophic loss to their property and possessions, the battle begins. The insurance company will do everything it can within legal (and sometimes illegal) means to low-ball the amount of compensation you will receive.
The burden of proof that you purchased the belongings, and the net value of those possessions lies with the homeowner. And unless you are a scrupulous accountant, retaining evidence and receipts for those purchases, you may struggle to provide the evidence required to be compensated for the loss of your property.
How Your Home Insurance Company Decides on Replacement Costs and Compensation
There are three terms that homeowners (and commercial property owners) should familiarize themselves with, to properly document all property and possessions. These policies factor into the amount of compensation that you will receive for lost or damaged goods, due to theft or a natural disaster in Oklahoma.
You may have purchased a stainless-steel fridge for $1700, but that does not mean the insurance company will compensate you at that rate for the damaged appliance. The age of the property, wear and tear, and normal contents claim process requires an evaluation of how long you have owned the appliance, what shape it was in, and the replacement value of the contents inside (which is usually capped for food spoilage around $250).
The rules of depreciation are also applied for damage or replacement cost determination for vehicles such as cars and trucks, as well as recreational vehicles including ATVs, boats, and RVs.
2. Actual Cash Value (ACV)
The actual cash value of your property is determined similarly to the ‘Black Book’ value of your property. The actual cash value is the original cost that you paid to purchase the possession or property, less the amount that it would cost you to replace or repair it. This is subject to varying limitations depending on your insurance carrier and policy.
Here are some examples. If the insurance company has to replace a roof that was in poor repair or not maintained properly according to the adjuster’s report, they may opt to only repair the specific areas of the roof that were damaged. If an insurance company was required to replace your vehicle, they can compensate you based on the cost of replacing it with the same year, model and condition as the vehicle you lost.
3. Replacement Cost (RC)
To collect the full amount of the cost of your lost items, you must purchase new replacement items (equal to or less than the value of your damaged possessions) and provide those receipts to the insurer. When you have demonstrated that you have purchased and replaced all the goods and provided legal evidence to the insurer of the cost of replacement, you have the right to demand compensation for the replacement of goods. Don’t expect them to notify you of this right or method of compensation; they will not volunteer the information for obvious reasons.
To avoid a long and delayed settlement and compensation for the property and goods lost, stolen or damaged as part of your insurance claim, you must be prepared to provide irrefutable evidence that you owned the property. You must also be organized and prepared to argue with evidence, the condition of the property prior to loss.
Organize a Digital File or Insurance Binder for Your Possessions
The safest place to store your digital information is online, where it cannot be lost. Many homeowners have documented information only to lose their phone, or have their phone damaged, losing the evidence they need to fight for fair compensation from their insurer. Consider creating a Gmail email address, and a folder to contain all your digital recipes, bank statements (showing purchases and expenses) as well as photographs of the damaged or lost items (before and after).
How to document your possessions:
- Keep all your receipts for major purchases. From appliances to furnishings, jewelry, apparel, digital electronics (televisions, gaming consoles, computer and sound systems). File these in a safe place or consider scanning them into a digital file and storing them in a folder online in Google Drive.
- Take pictures of all your home contents. You can either take individual pictures, or you can take short video clips on your smartphone of the interior of your home. Make a list of all the valuables contained within your house, and make sure to document them with pictures or videos. This will help determine the state of the good and help support less depreciation on the valuation of replacement for your property.
3. Remember to add jewelry and other expensive purchases on to your home insurance policy. If you have just become engaged or married, add your rings to your insurance policy with a valuation certificate provided by the jeweler, to authenticate market value of your property.
Always know the terms of your home, business and vehicle insurance coverage. Remember, it is the job of the insurance company to answer all of your questions regarding to your entitlements and the terms and limitations for compensation for lost, stolen or damaged property. The more you know about the benefits and entitlements, the better prepared your family will be to respond and deal effectively with your insurance provider(s).