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Old 04-26-2006, 06:00 AM   #1
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Replacement cost


A friend has replacement cost on their homeowners insurance. They had storm damage to their house recently. Is the insurance company supposed to give them a check for the full estimate amount or is the insurance company allowed to hold part of the check until all the work is done?

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Last edited by redline; 04-26-2006 at 06:03 AM.
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Old 04-26-2006, 06:36 AM   #2
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Replacement cost


Never had to deal with insurance, but my replacement cost means if they replace anything it will be based on the price of that item now and not based on what you paid for it.

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Old 04-26-2006, 10:33 AM   #3
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Replacement cost


Somebody usually holds something back to ensure that the work is done. When we were hit by Frances and Jeanne we were paid about 25% upfront and the rest was given to the mortgage co. and doled out as various projects were completed.

Their view is that if they hand someone a big chunk of money they may decide to take a vacation instead of repairing the house. After Andrew a lot of people with low equity just took the money and ran leaving the mortgage co with a trashed house.
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Old 04-26-2006, 12:00 PM   #4
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Replacement cost


Thanks for the replies.

The damage was from a tree that fell during a wind storm. The tree hit the house. Damaged part of the roof. Damaged the siding on two sides of the house. Pulled down the gutters and down spouts. Damaged a few windows. Completely destroyed a shed. Luckily no one was hurt.

Should the insurance company pay the estimates for the damages or withhold some of the money until the work is completed?


There is no mortgage company involved.

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Old 04-26-2006, 04:16 PM   #5
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Replacement cost


If the home is owned outright and is insured for replacement value, they should pay up based on your estimates. If not, ask why not?
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Old 04-26-2006, 08:00 PM   #6
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Replacement cost


For some strange reason they want to hold back some of the money until the work is complete. The break down states that the items are depreciated but the policy states that it is a replacement cost policy.

The insurance company says that the home owner will have to pay the contractor when the job(s) are complete then submit the bill to the insurance company to get the remaining balance. The home owner is concerned that if he pays the contractors when the work is done, what would happen if the insurance company refuses to reimburse the homeowner?
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Old 04-26-2006, 08:10 PM   #7
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Replacement cost


Something smells funny here. Maybe it's time to suggest to them about going to the lawdogs.
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Old 04-27-2006, 04:24 PM   #8
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Replacement cost


Quote:
Originally Posted by Teetorbilt
Something smells funny here.
It sure does
It's not unusual for the ins. co. to hold back $ for repairs as Teetor described, or even pay out in installments
But that's if a mortgage is held

The mortgage company wants to make sure you fix "their" house with the money

If their is no mortgage, the ins. co. is probably out of line (I'm sure states vary)

If their is a mortgage, then the mortgage co. is involved, even if the homeowner hasn't specifically talked to them
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Old 04-27-2006, 05:57 PM   #9
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Replacement cost


The house is paid off. The house was inherited from a family member and the house has been paid off for more than 15 years. The insurance company seems to be trying to take the least expensive way out and not honor the policy. The policy is the highest (premium) policy that they offer.
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Old 04-29-2006, 01:43 AM   #10
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Replacement cost


Happened to me during the hurricane last year. They gave me a portion of my check and then I had to turn in receipts to recieve the rest. My insurance agent says it is due to all the fraud and people collecting money but not fixing the house.

It stinks for the people that really just want to fix everything up and be done. Waiting on the insurance company can be a nightmare of a wait in my experience. Its bad enough they get such a big chunk of a deductible!
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Old 04-30-2006, 10:17 AM   #11
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Replacement cost


The insurance company is mroe than willing to receive their payment but they are less than willing to pay for a claim.
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Old 05-01-2006, 08:54 AM   #12
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Replacement cost


Quote:
Originally Posted by Alyssa
Happened to me during the hurricane last year. They gave me a portion of my check and then I had to turn in receipts to recieve the rest. My insurance agent says it is due to all the fraud and people collecting money but not fixing the house.
How much did the insurance hold back? (10%, 15%, 25%...)

The damage to my friends house was under $10,000. I would think that the insuranace company would want to get everything fixed as soon as possible.

I could understand if someones whole house was destroyed by a hurricane and the insurance company wanted to hold back money as the house was rebuilt from scratch but the damage to my friends house is not as severe.
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Old 05-02-2006, 12:17 AM   #13
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Replacement cost


I don't know how your state works. In the state of Illinois we have the illinois dept of insurance. When a insurance company is screwing you its one phone call to them fill out a complaint and things get paid. Its that simple. Or at least it was for me the one time i called them. Got the complaint to file month later another letter saying they order the insurance company to pay claim in full. Week later lettter in mail from insurance company saying paid in full.
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Old 05-03-2006, 07:36 AM   #14
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They may contact the state next if they are not satisified.
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Old 05-05-2006, 10:25 AM   #15
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Replacement cost


Quote:
Originally Posted by redline
The house is paid off. The house was inherited from a family member and the house has been paid off for more than 15 years. The insurance company seems to be trying to take the least expensive way out and not honor the policy. The policy is the highest (premium) policy that they offer.
This is a good reason to self insure the house, when you own it yourself. Considering the cost of insurance, had you saved the amount for the 15+ years, you would be able to pay for the repairs yourself and still have quite a bit left. I suppose it's also a good reason to not have big trees by the house.

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