How does home insurance rate our assets in case of loss?

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We are all clear that home insurance is that mattress that prevents us from falling abruptly to the ground in the event of an accident because although it has an infinity of varied coverage, one of its main functions is to help financially support those affected by a serious event in their home and offer them solutions for reconstruction.

A fire, flood, or severe electrical failure may not be frequent, but it is possible. Events like these are capable of causing a real disaster in our homes, seriously affecting not only the continent, the space in which we live, but also the contentthe objects found in it. 

Now, what is the solution offered in this type of situation? How do insurers assess the value of goods that are damaged after an accident? There is no magic formula because it will depend on the insurance company of which we are clients and the particular conditions that we have agreed in the policy, but there are some guidelines that are repeated in most contracts and that show in general terms the usual modus operandi in this kind of scenario. 

What is the replacement value for new?

Generally, both the continent (the structure of the building) and the content (furniture, fixtures) are appraised at their new replacement value, without suffering any depreciation due to their age, obsoleteness, or wear due to use. At this point, it is convenient to clarify what this value consists of, which is what the goods would have in a new state on the market at the time of the loss. In these cases, the appraisal, therefore, favors the client’s interests, and GENERALI does so. 

However, insurers usually establish numerous exceptions to this type of valuation, opting to appraise certain objects at their real value -the result of deducting from the value again the depreciation that they may have suffered due to their age, their use, or their condition. Of conservation just before the incident occurred. This category includes objects that have not had to be rebuilt or replaced, old buildings whose structures have not been recently renovated or repaired, electrical and electronic equipment that is already considered old, goods that are in a poor state of conservation, or parts that are useless, obsolete or unusable. 

Valuable objects, such as jewelry, antiques, paintings, sculptures, works of art or crafts… are also usually appraised at their real value at the time before the incident; at GENERALI, we also do it this way. A separate chapter deserves the collections or sets of objects, which are usually valued only in the damaged parts, and the possible depreciation suffered by the set is not valued, being treated individually instead of as a whole.

The responsibility of the insured

In this sense, it is important to point out the responsibility of the insured in providing the precise documentation that helps the correct appraisal. For example, with respect to the losses of money suffered, which must be proven by the presentation of bank statements or other supporting documents. Or in what refers to the expenses that you have paid that are covered by the policy, whose validity the insurance company will determine thanks to the invoices that we send you. In addition, surely the client will have to fulfill other duties; For example, if objects have disappeared due to the accident, he will have to be able to prove their previous existence. 

You must also take into account the conditions that you have signed with the insurer regarding the reconstruction or replacement, such as the period of time from the date of the accident in which these operations can be carried out; the conditions under which the reconstruction will take place if it is carried out in another location – something, in principle, that can only be done by legal imperative – and how the relevant compensation would be determined in this situation; or the way in which specific objects such as clothing will be valued. 

A common situation in this type of incident is the loss, destruction, or disablement of objects that are irreplaceable, either because they are no longer manufactured or because they are out of use on the market. In these cases, it is common for the contract signed by the client and the insurer to contemplate that they can be replaced by others that have similar characteristics and perform the same function. As always, informing us in detail about the clauses of the home casualty insurance that we subscribe to is the key to being clear about how any situation that may arise in the future can be resolved.

By Master James

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