How Does the Homeowners Insurance Claims Process Work?
DISCLAIMER: We are not Lawyers, Public Adjusters, or Insurance Agents. The following is the insurance claims process as seen from our perspective and uses anecdotal situations to explain the process. It is meant to help homeowners unfamiliar with the process to utilize resources at their disposal and make the most informed decision before entering into a contractually bound relationship with a contractor.
Your home experienced a weather event, and you called your Insurance Agent asking what to do. They explain that you should open up a claim. Now what?
As a homeowner a lot of the burden for navigating the insurance process is put on you, even though you may or not have experience with the process. Remember the informational pamphlets you received from your carrier after you signed up with them? Remember them taking up space in your junk drawer for a year before you convinced yourself, "This can probably all be found online?"
Good news, you were right! There is an abundance of material online that can help you navigate your first insurance claim. Here we will explain what you can expect (from the perspective of a contractor) during a typical homeowner's insurance claim, things to be aware of, and time-saving resources that will make sure your process is as smooth and seamless as possible.
First things first... BREATHE!
This isn't the first claim ever to be filed and it certainly won't be the last. Your insurance company has a team of trained professionals to help you navigate this process and give you specific details as they relate to your insurance company.
The actual filing of the claim is a company-specific protocol that will be taken care of through the help of your Agent or your Carrier's Claim Department. During this time, it is best to ask for advice, timelines, and if there are any recommended contractors that the carrier works with.
Once filed, your insurance carrier will contact you within 48 hours to set an inspection appointment for their adjuster to come review the property in order to create a report of their findings. It is usually at the same time that you will receive information about the Field Adjuster and Desk Adjuster. Okay, but who is an adjuster?
An adjuster is a representative that works directly for an Insurance Carrier or one that works as an Independent Third Party, on behalf of the carrier. It is their job to visit or investigate the damage to your home and report back to the carrier what they find, which comes in the form of an "Adjuster's Report" or "Scope of Work." More specifically this role will often be referred to as a "Field Adjuster." Your "Desk Adjuster" is your point of contact with the carrier for everything that has to do with your newly opened claim.
Adjustment Appointments
One of the most important parts of your claims process is the adjustment. An adjustment is a scheduled appointment where the Adjuster can conduct his or her investigation into the damage and report their findings back to the carrier. An adjuster will not always indicate whether the damage is covered under your policy, and most of the time they do not have the authority to do so. Your adjustment appointment is the opportunity for the Field Adjuster to attempt to formulate exactly what happened, and what led to the damage that your home experienced.
It is always important for you, as the homeowner, to be present during this appointment. It is your time to lend the adjuster any relevant information that will help his report, like, the age of the homes affected area (roof, plumbing, electrical, etc.), the date of the damaging event, the date when the damage was noticed, where the damage has occurred, etc.
At NEXGEN Roofing, we always recommend that if you do have a Contractor at this point, they should be present at this Adjustment as well. This is for a few reasons:
Contractors are familiar with the process and can usually expedite an inspection.
Contractors are experts in construction and will be able to identify with the adjuster, and you, what necessary remedies apply to the Adjuster's investigation.
Contractors understand the industry jargon that can sometimes be lost on a homeowner with no experience. A good contractor will make sure that you are well informed on everything that the report entails.
A Contractor can ensure a fair assessment by an Adjuster and see that all damage is properly accounted for and investigated.
Let's Talk Payments
DISCLAIMER: The following is in no way an interpretation of policy or coverage but a breakdown of the types of payments that can be expected during a typical insurance process. Any terminology definitions and explanations are directly interpreted and are not of the opinion or determination of the author.
You have had your adjustment and your carrier has determined that the damage to your home is a "covered loss" and you've received an approved Adjuster's Report/Scope of Work. What is a covered loss? It is the damage or "loss" that is covered by your Homeowner's insurance policy.
Reading these Scopes/Adjuster's Reports can be confusing, especially to the untrained eye. There are a few important things to know when going through your report that will help you understand exactly what is being paid for and when it is being paid. Several of the important items have to do with the payments you will be receiving for the covered damages. In the next few paragraphs, you will understand exactly what each of these payments represent and a little more about the process of their remittance.
Depending on your policy, you will see one, two, or all of the following Acronyms and terms. Remember, the best resource during this process is your carrier; they will have all of the specifics for your policy.
RCV or Replacement Cost Value:
Replacement Cost Value is the price it is going to cost (as determined by your carrier) to replace the damages to bring your home back to its pre-loss condition. It is the TOTAL amount that will be paid to cover each item in your adjuster's report.
The RCV is, however, the overall number that is made up of several parts. These parts include ACV, Deductible, and Depreciation. There are also items filed in the form of a Supplement, but we will unpack that concept in another post.
ACV or Actual Cash Value:
The Actual Cash Value (ACV) is the portion of the RCV that is less the deductible and the recoverable depreciation. Otherwise written as ACV = RCV - Deductible - Recoverable Depreciation. The ACV is the value of what it costs to fix the damage in its current state. If the Replacement Cost Value is $10,000, your deductible is $1000, and your roof is 12 years old, then your carrier may depreciate the roof by $5000 based on the age of the roof and you wind up with an ACV of $4,000.
Here's an example of the computation:
RCV = $10,000
Deductible: ($1,000)
Recoverable Depreciation: ($5,000)
ACV: = $4,000
Once you understand how the carrier got to that amount, you are well on your way to becoming knowledgeable in the Insurance process.
Your ACV Check is going to be the amount of money you receive first and will often times be the amount of money a Contractor requires to complete most, if not all the work on your project.
Recoverable Depreciation:
The recoverable depreciation is the portion of the proceeds that you receive once a project is complete - usually upon receiving a certificate of completion or the equivalent from the county. You can only "claim" the recoverable depreciation when the repairs or replacement is proven to be completed.
Depending on the age and state of the area of your home that has been damaged, the carrier will determine the amount of the proceeds that are going to be depreciated. Depreciation is the "gap" between the RCV and the ACV minus the deductible.
Deductible:
Your deductible is the amount of money you, as the homeowner, are obligated to pay out of pocket. It is a legal requirement to pay this money to your contractor. If a contractor has offered to "waive" your deductible, they are in violation of the law and serious repercussions can be taken against the contractor and you as the homeowner, should you not pay the deductible. It is considered insurance fraud.
Supplement:
Once your project is completed your contractor may submit something called a Supplement to your insurance carrier. Remember how the initial adjuster's report was based on their first investigative appointment? Sometimes there are items that are missing from the initial scope that must be completed by the contractor to ensure all code requirements are met and to make sure you are getting the product that you are owed for. Sometimes these items will include extra material that was not originally accounted for but are discussed with your carrier and approved.
It is important to remember that all items that are sent into the insurance company for payment typically require photographic evidence of their completion. This is to protect you and your carrier to make sure contractors are not submitting items that were either never completed or done improperly.
Picking the Right Professionals for Your Claim
Experiencing any loss or damage to your home is a stressful and, in most cases, a new situation for a homeowner to go through. It is crucial that you, as a homeowner, use your available resources to best understand the process. In addition to consulting your agent, it is imperative to do business with a reputable contractor that understands the insurance process. Without using a trusted contractor, you could be exposing yourself to extreme liability. At NEXGEN Roofing, we believe it is our duty to educate our customers on the process so they can have peace of mind, knowing that they are being taken care of in a vulnerable state.
For specific questions about your individual process, email our team of professionals at info@nexgenfl.com or fill out our Contact Form.