Special Replacement Cost Policy | No Coinsurance Policy
Most policies have a coinsurance clause that states if your policy is insured below a certain amount usually 80% of the replacement value of the property your coverage is decreased, there is a penalty applied to the loss payout, or the coverage is changed to actual cash value loss settlement.
There are three ways to avoid penalties. The hardest is to personally, regularly, make sure your coverage is at the amount that the insurer requires by contract in comparison to the actual cash value or the replacement cost of the property insured. Some attempt to do this by applying an insurance endorsement to try to keep up with inflation so they do not need to manually check on coverage.
Name your coverage amount and have all eligible losses settled at replacement cost.
The second and what seems is the best way so far is to get a policy that allows you to pick the amount of coverage you want on your income property and the losses are always settled based on a replacement cost settlement option that is spelled out in the contract. Of course the amount of coverage is capped out at the amount you pick. For example if you insure a building for $100,000 and to replace the building actually costs $400,000 you will only get the $100,000 because that is the amount of insurance you paid for.
Let’s say however that the house that you insured for $100,000 has a small loss to a kitchen and to repair this costs $50,000. You may be able to get the entire $50,000 for the repair, after any deductible. What could make this better? No deductible! What? Is it possible? Yes, we have found at least one company that will eliminate the deductible if your eligible loss exceeds 10x your deductible.
Since many landlords will never call in a small claim they take higher deductibles to save themselves money. Most choose $2,500 or $5,000 deductibles. So, if a $2,500 deductible is chosen an eligible loss over $25,000 would have no deductible.
There are many facets to building policies like this and each one is unique to the location and landlord eligibility. It is best to contact us at 607-843-8860 or insurance@drickardinsurance.com to discuss this further. Remember that all insurance possibilities discussed are illustrative only and that all policies differ from insurer to insurer and are subject to the terms, limitations and stipulations of the contract you purchase.
A common way to eliminate surprise penalties in your insurance policy is to make sure the section that tells you what your policy’s coinsurance clause or amount is states Flat, Nil, 0, or None. In this manner when the claim adjuster tries to decrease the amount of recovery that you can get from the insurer the amount he can plug in to decrease your benefit by is 0.
For more information and to find out if your tenant occupied property qualifies for the insurance policies we have found please contact us at insurance@drickardinsurance.com or 607-843-8860.
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All prices, programs, features, underwriting, offers, representations and companies shown in this site are subject to change without notice. We may add or discontinue a company or program or an insurer may change underwriting criteria or product line availability without notice to us. With the insurance industry constantly changing we may not be able to keep the site up with the latest information. For the up to date info please contact us. All insurance applications are always subject to current underwriting rules, acceptance of the insurer and adequate premium paid.