Well, a huge example of this pitfall is now out there for you to see. One of the largest insurance companies in Tennessee will soon make a major change to its home policy regarding paying for roof damage. Beginning October 1, 2012 it will start paying its existing and new customers based on “Actual Cash Value” for roof repair claims, instead of “Replacement Cost”, as it has in the past.
What’s the difference? Well, potentially, big. If you’re their customer and your 12-year old roof needs replacing because of a claim (hailstorm, windstorm, fire, etc.), your settlement (the amount they pay you to have your roof repaired or replaced) may not be enough to pay for a brand-new roof. Instead, the company will calculate 12 years worth of depreciation, deduct it from the replacement amount, and THAT will be what you receive. Could be thousands of dollars of difference! Think a roofing company will accept that depreciated amount for installing a brand-new roof? Probably not -- and you’ll be asked to make up the difference -- if you want the new roof.
If your roof is even older, that’s even more depreciation that will be counted against you. Of course, if you have a brand-new roof, there will be little depreciation, but then, new roofs usually don’t need replacing.
Of course, an insurance company is not going to trumpet to the world about this change, other than filing it with the state of Tennessee, and providing legal notice to its customers. Remember, on paper, the difference is only a few words (“Actual Cash Value” instead of “Replacement Cost”), but to your wallet, it could be a major difference!
Insurance is NOT a commodity. Insurance providers and their policies are NOT all the same. This brief story is but one example of why you need to do a little research and work with a knowledgeable insurance agent to help you get the best coverage possible. Let’s meet, and I’ll be happy to take a look at your home and auto policies and help you do just that. My office is nearby, in the Cool Springs area of Franklin, TN.
David Yates Insurance Agency
1881 General George Patton Dr., Suite 103
Franklin TN 37067
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