How is the Settlement Amount Determined?

How is the Settlement Amount Determined? Related Information:

The amount of settlement you receive from a claim on your home insurance policy is determined by how much insurance coverage you have and the reasons for the damage or loss. You have to carefully read your policy to see what is and isn’t covered. If your home was destroyed in a flood, you may not have had that coverage listed on your policy and therefore do not qualify for any settlement. You also have to look at the overall amount of coverage you have. If you have a home valued at $150,000, you need to have coverage for more than that amount because you also have to consider the cost of your furniture and personal effects.

When you file a claim with your insurance company, an adjuster will be sent to access the damages. If there is damage to part of the home, the adjuster will take photos of the damage and then contact other agencies for an estimate on the costs of doing the repairs. If you had any contents damaged, the cost of these will be included as well. You will receive two separate checks, - one for the home and one for the contents. The amount of deductible agreed upon in your policy will be deducted from each of the checks. If you are unable to live in the home while the repairs are being carried out, the cost of alternate living expenses will also be paid by the insurance company. You have to remit the receipts for these expenses in order to get reimbursed.

The type of insurance policy you have will determine how much of a settlement you will receive. While the home itself is usually covered for the amount of your mortgage, you de need to have replacement cost coverage on the contents. What this means is that you will receive the full amount of what you paid for each item, no matter how long you have had it. If you paid $600 for a stove five years ago, you will still get $600 for the stove. If you don’t have replacement cost, then the amount of money you receive for the contents will be substantially less than what it will cost you to replace it. Without replacement cost coverage, you might only get about $50 for the stove because depreciation and market value are taken into consideration.

If you have a mortgage on your home, the settlement check will be made out to both you and the lender. Lenders require you to have insurance before they will grant you a mortgage and require that their names be listed on the policy. Even if you have your home paid off, or just about paid off, the lender’s name will still appear on the check. You will have to have the lender’s signature before you can cash the check. This amount will go to paying off your mortgage, but you own whatever is left over. It is your decision whether or not you rebuild. No matter what you decide the amount of the check will still have the amount of the deductible for your policy subtracted from the amount.

You could expect to get up to four separate checks in the event that your home is a total loss. These will be an advance payment to help you get by, the amount of the structural damage to the residence, the amount for the loss of the contents and the amount for expenses that you incurred in the interim period. Of these only the one for the home will be made out jointly to you and your mortgage company.