Did You Know?

How to Complete a Claims Notice

From the Claim’s Perspective, it is vital that our First Notice of Loss (Accord Form) be completed with as much detail as possible. Specifically, it should include the insured name, policy number and Date of Loss.  Other vital information includes the vehicle involved in a collision claim or the loss location for a property loss. Any details about the loss itself should be included on that document. The best contact person along with a cell phone and email address is also very helpful in the adjuster’s ability to expedite the initial handling.

Another document that may be helpful to our insured is an “Incident Report” that they can use in-house regardless of whether they are reporting the loss to their agent/carrier.  This is a template that an insured can use to document an accident big/small that occurs on/off their premises. The Incident report allows the insured or their representative to have a document on hand wherein they can document any specific details regarding a potential loss. This would include any witnesses, conditions/factors that may have contributed to the loss and any parties involved. Documenting the details early can prove very helpful in the event a claim needs to be filed later.

Use this fillable Incident Report Template to assist you when filing a claim. The form can also be found on the Agent Portal.

Lumber at record high – the effect on ITV

Lumber costs are one of the major factors in determining if the amount a property is insured for covers the cost of material needed to repair or rebuild. Lumber prices are at an all-time high and buying habits of construction companies and wood wholesalers are contributing to the possibility of price swings to be even bigger. Exoduses from major cities have triggered a homebuilding boom and lockdowns have spurred a demand for home renovation. Analysts predict some easing of the market as we move through 2021, but the importance of ITV cannot be stressed enough when insuring a property adequately in the event of a claim. In the article “Would Your Insured be able to Rebuild after a Total Loss?” we take a more in-depth look at ITV and how it affects whether a property owner will be covered in a loss or if they will be left with more than just a damaged home.

Would Your Insured be Able to Rebuild After a Total Loss?

Imagine your house burns to the ground. It is not something we ever want to think about but in the insurance world, we need to be prepared for the worst-case scenario. Now imagine thinking you were fully covered but you are informed that your insurance only covered 80% of the cost to rebuild. How would you feel?

We often see submissions where structure limits are requested at 80% of Insurance to Value (ITV) to meet the coinsurance requirement of our policy. Did you know that if there is a total loss, that limit of insurance is the most we will pay (aside from additional coverages/coverage extensions)?

The issue of Insurance to Value has become a hot topic with the uptick in California wildfires where the same and similar scenarios to the above have occurred with surprising recurrence. Many who lost homes were unpleasantly surprised to learn that their policy did not fully cover the cost to rebuild the structure as it was before the fire. However, the issue of ITV does not just affect CA.

80% is only the threshold where the Insured will not incur a coinsurance penalty on a dwelling. If a barn is insured to less than 80% coinsurance, it will be settled on actual cash value basis. Insuring to 80% coinsurance means the Insured could be responsible for 20% or more (ACV) out of pocket if there is a total loss and they want to rebuild their structure in a similar way as it existed before the loss.

The cost of construction materials and construction labor have skyrocketed in recent years due to the decrease in skilled labor and high demand for construction materials. This is an even greater concern after a Catastrophic event, such as a wildfire where both materials and labor are in higher demand due to the increased number of people rebuilding. This is also the reason determining true replacement cost and not market value is your friend. In today’s world, the cost to rebuild a structure is often much higher than the market value.

As insurance professionals, it is important we work together to make sure our collective clients are properly covered. We count on you, our agents, to discuss Insurance to Value with the Insured and determine if the limits on the policy are adequate to indemnify the Insured in the event of a total loss. From a carrier standpoint, we offer valuation software that can assist you in determining proper Insurance to Value. A rudimentary Insurance to Value analysis based on area, structure limit and area of the county is also completed during the underwriting process but the details pertinent to the structure are what is paramount to determining proper Insurance to Value. If you do not have access to our valuation software (E2 Value), please let your underwriter know and we will be happy to get you set up. Feel free to discuss specific Insurance to Value questions with your underwriter, we are here to help!

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