Hail Archives

Galisteo Center Condominium Association

Santa Fe, New Mexico
Hail Damage
August 2021

Right from the start, our team was involved. After an initial joint inspection, the insurance carrier proposed a settlement of $629,000. We knew that wasn’t enough. By highlighting the need for code upgrades and the replacement of outdated materials, we successfully increased the claim’s value. Although the insurance carrier initially resisted covering overhead and profit, our team’s tenacity paid off. The end result? A remarkable final settlement of $1,935,000.

Insurance Carrier Offer: $629,000

Premier Claims Settlement: $1,935,000

Understanding your insurance policy can be daunting, especially when faced with complex terms like “recoverable depreciation.” For numerous policyholders, this idea might seem unfamiliar. Yet, it’s crucial for both Replacement Cost Value (RCV) and Actual Cash Value (ACV) policies. In this guide, we’ll cover recoverable depreciation, differentiate RCV from ACV, clarify payment timing for recoverable depreciation, and share key info every policyholder should grasp about it.

What is Recoverable Depreciation?

This term is often overlooked but vital in the insurance claim process. To fully understand this concept, let’s break down what it entails: Recoverable Depreciation refers to the difference between the Replacement Cost Value and the Actual Cash Value of a damaged item. The policyholder can “recover” the insurance carrier’s withheld amount after documenting repairs. Certain policies don’t pay non-recoverable depreciation to the policyholder. Understanding whether your policy includes recoverable or non-recoverable depreciation is vital when filing a claim.

Calculating Recoverable Depreciation

Understanding how to calculate Recoverable Depreciation can help policyholders gain insight into the amount they can reclaim.

Determine the Replacement Cost Value (RCV): This is the total cost of replacing or restoring the damage with a similar quality and type. A licensed and experienced public adjuster, estimator or contractor are all professionals that can determine the replacement cost value of damage to your property based on current costs of labor and materials.
Find the Recoverable Depreciation: The Recoverable Depreciation is the difference between the RCV and ACV. Traditionally, depreciation is calculated based on the item or the product’s useful life. For example, say you purchase a washer & dryer for $2,100 with an estimated useful life of 15 years. By dividing the total cost at the time of purchase ($2,100) by the estimated lifespan (15 years), it would determine the washer & dryer to depreciate by $140 each year. Therefore, if after 5 years the laundry units ACV would be $1,400 (5 years x $140 = $700 in depreciation over five years. The initial purchase price $2,100 minus the $700 in depreciation = $1,400). However, this is just a very general example. When it comes to property damage and filing an insurance claim, each insurance carrier, circumstance, and loss are unique, and the calculation of depreciation may vary.
Calculate the Actual Cash Value (ACV): This involves determining the RCV and then subtracting the depreciation based on age, wear and tear, or other factors. Thus, Actual Cash Value (ACV) = Replacement Cost Value (RCV) – Depreciation.

Impact of Inflation

Inflation is an often-overlooked factor that can significantly impact Recoverable Depreciation. As the general price level of goods and services rises over time, the cost of replacing or repairing damaged property can also increase. This inflationary effect results in the Replacement Cost Value (RCV) of an item being potentially higher today than when the policy was purchased or just a few years ago. Therefore, if we calculate Recoverable Depreciation using outdated cost estimates, it might not accurately represent today’s market’s actual replacement cost. Policyholders should be aware of this dynamic and consider working with insurance professionals who actively monitor inflation trends and update valuations accordingly. Understanding and accounting for inflation in the calculation of Recoverable Depreciation ensures a more accurate and fair settlement, aligning the claim payout with the real-world costs of repair or replacement.

RCV vs. ACV: What’s the Difference?

Replacement Cost Value (RCV)

Replacement Cost Value (RCV) policies cover the cost of replacing damaged or lost property without deducting depreciation. In other words, if an item is destroyed, the insurance company pays the cost to replace it with a brand-new item of like kind and quality.

1. Pros: Can fully cover the costs of replacing or repairing damaged property.
2. Cons: Typically comes with a higher premium.

Actual Cash Value (ACV)

Actual Cash Value (ACV) policies, on the other hand, take into account depreciation. The insurance company will pay for the cost to replace the item, minus a deduction for the wear and tear or aging of the item. Essentially, ACV pays for what the item was worth at the time of the loss.

1. Pros: Generally offers lower premiums.
2. Cons: May result in out-of-pocket expenses if the depreciated value doesn’t cover the full replacement cost.

When Does the Policyholder Receive Payment for Recoverable Depreciation?

Initial Payout: After a claim is approved, the insurance carrier usually pays the ACV first, holding back the recoverable depreciation.
Final Payout: Insurance companies generally pay recoverable depreciation after completing repairs or replacements and providing proper documentation.

Factors Affecting Payment

The quality of repairs, the timeliness of completion, and compliance with policy terms.

How to Claim Recoverable Depreciation

Policyholders with a Replacement Cost Value (RCV) policy must actively reclaim recoverable depreciation. This process involves carefully following a series of coordinated steps to ensure they receive the full entitled amount. This process is not just about understanding the numbers but also knowing how to navigate the insurance claim procedures and documentation requirements. Below are the general steps to reclaim recoverable depreciation; however, if you’re unsure of the requirements within your policy to reclaim recoverable depreciation, get your policy reviewed by our team of legal experts.

Complete Repairs: Work with a licensed contractor to ensure quality repairs.
Submit Documentation: Provide invoices and other necessary documents to your insurance company.
Follow-up: Regularly check with the insurance carrier to ensure the process is on track.
Consult Professionals if Needed: If issues arise, consider seeking professional help.

The Importance of Recoverable Depreciation for Policyholders and Insurance Carriers

Recoverable depreciation is more than just an insurance term; it’s a critical component that directly impacts a policyholder’s claim payout. Understanding this aspect is crucial for policyholders, ensuring a fair settlement that matches repair or replacement costs. Meanwhile, insurance carriers employ recoverable depreciation to align claim payments with real-world expenses and prevent overpayment.

Why Does It Matter to Policyholders?

1. Financial Planning: Helps understand potential out-of-pocket costs.
2. Claim Recovery: Knowing how to claim recoverable depreciation ensures that policyholders receive what they’re entitled to.
3. Informed Decision Making: Helps in selecting the right insurance policy that suits individual needs.

Why Do Insurance Carriers Use It?

1. Prevents Overpayment: By paying only the ACV initially, insurers avoid overpayment if policyholders opt not to repair or replace the damaged item.
2. Encourages Proper Restoration: Recoverable Depreciation motivates policyholders to complete repairs or replacements to reclaim the withheld depreciation.
3. Aligns with Actual Costs: It ensures that payments align with actual costs, providing a fair system for both parties.

Common Misconceptions

1. It’s Automatically Paid: Some policyholders mistakenly believe it receives an automatic payout without fully understanding the conditions.
2. No Time Limit: There might be time constraints that require completing repairs within a specific period.
3. All Policies Include It: Not all policies include recoverable depreciation; it depends on the type of policy and insurer.

Recoverable depreciation is more than just an insurance jargon; it’s an essential part of many insurance policies that can have significant financial implications. Whether you hold an RCV or ACV policy, comprehending the operation of recoverable depreciation and its payment timing can empower you to navigate the intricate insurance landscape with confidence. Gaining awareness enables you to make well-informed choices tailored to your unique circumstances and to secure the entitlements you deserve. Always consult with an insurance professional to understand your unique circumstances fully.

Rivermont Collegiate

Bettendorf, Iowa
Hail & Water Damage
May 2021

Nearly a year after a devastating hail storm, the building began to show alarming signs of water damage through the roof. Although still within the timeframe to file a claim, the insurance carrier was resistant, approving only minimal spot repairs that fell below the deductible amount. To counter this, we enlisted experts from the tile company to provide irrefutable forensic evidence, confirming that the damage occurred within the claim window. Moreover, our team successfully negotiated for a complete roof replacement, ensuring the historic building was restored while preserving its invaluable significance.

Insurance Carrier Offer: Only Spot Repairs

Premier Claims Settlement: $1,264,000

Confidential Religious Center

Orlando, Florida
Hail Damage
April 2021

From the start, our team uncovered undeniable evidence of hail damage to the 1,020-square metal roof. In an attempt to stall the process, the insurance carrier issued a ‘reservation of rights’ letter, suggesting the claim might not be sufficiently covered by the policy. They also sent an engineer and their own adjuster for further evaluation. To counter this delay tactic, we conducted a thorough legal review of the policy to confirm coverage and compiled a comprehensive estimate based on our investigations. Despite an ACV policy with endorsements, we successfully negotiated a final settlement of $1,162,000 for a complete roof replacement. After the settlement, and considering the property’s age, we advised the policyholder on upgrading to an RCV policy for more comprehensive future coverage.

Insurance Carrier Offer: Stated No Coverage Available

Premier Claims Settlement: $1,162,000

Deshler Public Schools

Deshler, Nebraska
Hail Damage
April 2021

At first, the insurance carrier approved only minor spot repairs for the flat part of the roof, amounting to a mere $993. The policyholder felt this was insufficient and reached out to us for assistance. Upon investigating, we discovered hail damage on the flat portion of the roof from an earlier date, as well as a separate incident that accounted for the damage to the metal portion of the roof. Armer with this new evidence, we filed two distinct claims. The result? A staggering final settlement of $912,000 for the policyholder.

Insurance Carrier Offer: Spot Repairs Totaling $993

Premier Claims Settlement: $912,000

DC Warehouse

Marshalltown, Iowa
Hail, Wind & Water Damage
August 2020

In August 2020, a derecho—a fast-moving cluster of severe thunderstorms capable of tornadic winds, heavy rains, and flash floods—devastated the Midwest. Despite the extensive damage to the building, the insurance carrier was offering a significantly underpaid settlement. That’s when our team stepped in to champion the policyholder’s cause. In less than 4 months, we successfully overturned the insurance carrier’s initial decision, securing a 7,664% increase in settlement that fully restored the building. Furthermore, we advised the policyholder on how to enhance their insurance plan to better safeguard against future incidents.

Insurance Carrier Offer: $14,000

Premier Claims Settlement: $1,087,000

In the insurance world, there’s often a gap between policyholders’ expectations and what insurance carriers actually cover. This gap can arise from a lack of knowledge about local building codes, leading to missed items or omissions in insurance claims. Contractors may unwittingly find themselves performing uncompensated work, either due to not requesting payment for specific items or lacking awareness of allowable expenses.

Understanding Ordinance or Law Coverage

Ordinance or Law Coverage stands as a pivotal component within insurance policies, particularly when building regulations influence reimbursements for construction and repairs. The Insurance Information Institute informed policyholders that “building codes are updated periodically and may have changed significantly since a home was built. In the event of damage, a policyholder may be required to rebuild their home to the new code’s standards.” Homeowners’ policies usually include limited building ordinance coverage, which can be extended through an endorsement. This coverage requires carriers to approve repairs following local building codes, compelling contractors to address often-excluded elements like ice and water shields, drip edges, house wraps, and flashings.

Research and Communication

Empowerment lies at the heart of effective insurance claims management. This begins by investing time in comprehending local building codes and manufacturer specifications, coupled with proactive engagement with Building Inspectors. Armed with such knowledge, policyholders gain a more authoritative position when negotiating with insurance carriers. This ultimately ensures equitable compensation for essential repairs, transforming potential challenges into opportunities for a fair resolution.

Navigating Your Policy’s Stance on Ordinance or Law Coverage

One of the most prudent steps policyholders can take is a comprehensive review of their current policy to determine whether Ordinance or Law coverage is included. Overlooking this coverage could lead to unforeseen out-of-pocket expenses or suboptimal repairs that fall short of complete replacement. To locate this part of your policy coverage, “review your declarations page and the policy fine print. Not all policies list code upgrade coverage in the same way,” as advised by United Policyholders. If your policy lacks this coverage, our Premier Claims team is here to guide you toward incorporating it. We understand the significance of such coverage and its role in safeguarding your interests.

Seeking Assistance with Denied or Underpaid Claims

Navigating insurance claims can sometimes be a complex journey, especially when they’re denied due to local codes. It’s in these moments that policyholders need a steadfast partner. At Premier Claims, we stand ready to assist, armed with adept knowledge, empathy, and professionalism. Our commitment is to guide you through the claims process, ensuring that you receive the rightful compensation you deserve. Facing denied claims due to local codes is not a solitary battle when you have Premier Claims by your side.

In the realm of property insurance claims, knowledge is indeed power. Premier Claims’ dedication to education and assistance reflects our commitment to fostering a more informed policyholder community. By unveiling the intricacies of building codes and insurance coverage, we aim to empower you to navigate claims with confidence. Let our expertise serve as your beacon, ensuring that you not only understand but also assert your rights within the insurance landscape. Connect with us today to embark on a journey of knowledge, empowerment, and fair claims resolution.

Winding Waters Condo Association

Oswego, Illinois
Hail & Wind Damage
June 2019

Initially, the insurance carrier did not fully recognize the value of the claim, leaving crucial damage underfunded. Our expert team stepped in, meticulously aligning the claim elements with code requirements and policy coverage. Through comprehensive documentation, we showcased the true costs of materials and labor, successfully boosting the claim’s value to its rightful amount.

Insurance Carrier Offer: $842,000

Premier Claims Settlement: $1,910,000

Tudor Heights Apartments

Omaha, Nebraska
Hail Damage
April 2019

After the insurance carrier initially denied the policyholder’s claim, our team was called in for an expert second opinion. Following a thorough inspection, it became clear that not only was the damage significant but it was also covered under their policy. As a result, the 420-unit apartment complex received comprehensive upgrades, including full roof replacements, new siding, and updated HVAC units, along with additional coverage for outdoor content for the residents.

Insurance Carrier Offer: Claim Denied

Premier Claims Settlement: $2,227,000

Increase Settlement by 208% with Code Upgrades with O&P Included