accident, adjuster, all perils, auto, automobile, car, claim, collision, comprehensive, coverage, crash, deductible, home, Insurance, payment, protection, vehicle

Replacement Cost vs. Actual Cash Value

RC vs ACVYou’ve probably heard the terms “replacement cost” and “actual cash value” at some point when discussing your insurance with your agent. Chances are you probably heard a bunch of terms while reviewing your coverage and wondered what does it all mean?   For today we are going to focus on these terms and how they relate to your coverage.

Actual Cash Value or “ACV” as it’s known in the industry is exactly what it sounds like… what the item is worth right now.  Insurers look at the initial cost of the item and then subtract depreciation for the number of years you had the item.  The depreciation applied can vary depending on the quality of the item, its current condition, age,  and what the life expectancy of the item is.

Replacement Cost means the amount of money it would take to replace damaged item with a new one of comparable material and quality used for the same purpose.  When shopping for insurance this is the coverage you ideally want to look for.  This coverage will get you closest to the living situation you had prior to the covered loss occurring.

When you suffer a claim the adjuster is going to request that you provide them with a full list of details including:

  • Description of the item(s) with make and model where applicable
  • Purchase date
  • Purchase price
  • Current replacement value
  • Receipt if available
  • Photos if available

Realistically you probably don’t keep the receipt for every item you have in your home. Even if you do there is a chance those receipts may have been lost in the claim.   So what can you do?  Well, keeping a photo log of the rooms in your home is a good start.  It will help the adjuster understand what items were in your home, and it also will help jog your memory as well.  Mike from our office has been through a fire and he can vouch for how hard it is to remember everything you had after a total loss.   Our smartphone app offers our clients the ability to store these photos in our office as part of their file.  That way the photos won’t also be lost in the claim and will help to expedite the claims process.

If your settlement is on Replacement Cost basis you can expect to receive two cheques from the insurance company.   The first cheque will be for the Actual Cash Value of the items that were damaged.  After you provide your adjuster with receipts for the replacement items you will be issued a second cheque for the difference between the Actual Cash Value and Replacement Cost.  This ensures you get Replacement Cost value for the items you do replace and the Actual Cash Value for the items you choose not to replace.

Some items just can’t be replaced. If the item is deemed obsolete or by inherent nature cannot be replaced, you may only be offered an Actual Cash Value settlement.   If you own items that are unique, or one of a kind, we encourage you to reach out to your agent to discuss if there are any additional coverage options available to you for these items. Some of these items may be insurable on a special floater where the items value is agreed on in advance of a loss occurring.

Actual Cash Value and Replacement Cost coverage are also used on  auto insurance policies. Here is an example of how it works on an automobile policy:

12 months after purchasing a brand new car for $40,000 you get in an accident. The damage is beyond repair and the vehicle is written off.

With Replacement Cost Coverage: Some insurers offer optional replacement cost coverage or a waiver of depreciation on brand new cars. With one of these endorsements on your policy you’d be able to replace your vehicle with a new version of the same model (or comparable one) or you could receive a cheque for the amount you originally paid for it.

With Actual Cash Value Coverage: Without one of these endorsements the settlement would be based on actual cash value. The insurer would look at what the market value of a vehicle of like kind and quality, in the same condition as yours was immediately prior to the loss occurring.   In a case like this, your settlement would likely be around $30,000 instead of your original purchase price of $40,000.

So there you have it. If you still have questions, or are concerned about your own policy coverages, please contact us.

 

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accident, auto, automobile, car, claim, collision, comprehensive, coverage, crash, deductible, Insurance, payment, protection, vehicle

Popular Insurance Misconceptions

let us knowMisconceptionsAfter nearly 55 years of service we’ve heard just about everything. What we’ve learned is that there are a lot of misconceptions about the insurance industry.   Here’s just a few of them:

Home policies cover EVERTHING!

  • WRONG!   Well to be fair the industry may have done this one to itself by naming the most common home policy the “comprehensive / all risk” policy.  The truth is even a comprehensive / all risk policy has exclusions. In fact, that’s kind of how it works. Rather than list all the things under the sun that the policy does cover, a comprehensive / all risk policy lists the items that are not covered by the policy.

A landlords policy covers his tenant

  • WRONG! One of the basic principles of insurance is that you can’t insure what you don’t own. The landlord can’t insure your possessions and you can’t insure their property either.   If you’re renting you need a tenants policy. These provide you with coverage for your personal property and personal liability. The good news is these policies are really affordable. Starting at around $15 per month depending on your needs.

A condo owners policy isn’t required if the condo corporation has insurance

  • WRONG! This is perhaps one of the most common assumptions made by condo owners. The reality is that the condo corporation is only required to buy insurance on the condo building / structure, common areas and liability coverage.   It’s up to you, the unit owner, to insure your personal contents, your personal liability, and your improvements and betterments that were made to your unit by either you or a prior owner.

Vehicles stored in your garage are covered by your home policy

  • WRONG! Remember how we talked about list of exclusions on a home policy? Yep, you guessed it, vehicles are on that list. Cars, Motorcycles, ATV’s, Snomobiles,  are excluded because they are better insured elsewhere….. on an automobile policy.

Red cars cost more to insure

  • WRONG! 46% of people think this is true (52% women & 48% men)
  • The color of your car has no direct impact on insurance rates. However there may be an indirect link.   According to a recent study red colored cars came in second for most tickets issued.   What color got first? White.

New cars always cost more to insure

  • WRONG! New cars are loaded with features that greatly reduce the likelihood of an accident occurring. Stability control, traction control, crash avoidance braking systems, lane assist, adaptive cruise control, driver attention detection and anti lock brakes to name a few.   If an accident does occur these vehicles are also equipped with additional features that reduce the severity of injuries from the accident, curtain airbags, thorax airbags with head protection, knee airbags, seatbelt pretensioner…. The list goes on.   Long story short, newer cars are safer and as a result insurers will often give better premiums for these vehicles.

Small cars cost less to insure

  • WRONG! 40% of people think this is true (42% women, 58% men)
  • Rates are based on insurance company’s loss history for that type of vehicle. Smaller cars are typically purchased by younger, inexperienced drivers, who submit more claims. Smaller vehicles also have a higher frequency of injury claims due to their lighter weight and smaller size.

Insurance will pay for the maintenance of my car

  • WRONG! Insurance is for sudden and accidental events only. Maintenance and service costs can certainly be unexpected and expensive but they aren’t what the policy was designed for.

I won’t be held responsible if my friend wrecks my car

  • WRONG! 25% of people think this is true (48% women & 50% men)
  • The truth is, as the vehicle owner, you’re responsible.   If they cause damage, the claim goes on your auto insurance policy and can affect your rates. If the claim is bad enough you could be named in a lawsuit.   Moral of the story is think carefully before tossing your keys to just anyone.

The insurance company keeps changing the rules on what’s covered and what isn’t covered.

  • WRONG! The car insurance industry is highly regulated by provincial governments who set minimum coverage levels. If insurance companies want to make coverage or premium changes they have to get approval from the government.

That’s just a sample of some of the questions we’ve been asked over the years.  If you have a question about your coverage let us know.

Sources

 http://www.propertycasualty360.com/2014/10/27/here-are-the-top-10-myths-in-insurance?t=personal-lines&slreturn=1516816279&page=3

http://www.ibc.ca/ns/insurance-101/insurance-basics/insurance-myths

http://blog.cjponyparts.com/2014/07/most-and-least-ticketed-types-makes-and-colors-cars/

Insurance

Holiday Shopping

Holiday ShoppingThe holidays are finally here and some of you, like myself, may still be searching for the right gifts for the loved ones on your list. Here are a few ideas for the tech lovers in your life that also might help in the event they ever have to make an insurance claim.

Dash cam – Insurers in Canada don’t yet offer a dash camera discount. According a recent survey by Kanetix.ca 10% of Canadian drivers already drive with a vehicle equipped with a dash cam.  More than 25% said that while they don’t currently have a dash cam in their car, they think it’s a good idea.  The best part is they aren’t even all that expensive.

No matter how much you choose to spend on one, they’re well worth the investment. The footage they capture can make all the difference in the event of an accident where the drivers are providing different statements to the police and insurance adjusters.    With the camera footage it becomes a lot easier to identify and prove exactly what really happened.

Connected car – If you’re giving your child their first car for Christmas chances are you did your homework and tried to find them a safe, reliable and affordable automobile.  When it comes to pre-owned cars though you never really know what problems you may face down the road.  Some telecommunication companies, Telus for example, are now offering connected car plans that can be added to your phone plan.  It’s a small device that plugs into the diagnostic port on the vehicle and can alert to potential issues with the cars systems.  It can push alerts to your smartphone alerting to any diagnostic trouble codes, if your battery is low, or if you left your lights on.  Pricing starts at around $15 a month

Smart Thermostat – These are becoming more and more popular.  Not only are they more energy efficient but they can also provide a huge advantage over traditional thermostats from an insurance perspective.  These thermostats can send a push notification to any device running the companion application (smartphone or tablet) alerting you if the temperature dips below a pre determined value.  This is extremely valuable feature during our harsh Canadian winters as theres nothing worse than coming home from a hard day at work to find a pipe froze and burst in your home.

Smart plugs and lights – Remember those days of setting up light timers before going on vacation.  What about coming home alone late at night to a dark house?  Wouldn’t it be great if your lights turned on automatically everyday without having to think about it?  Or if they turned on when you pulled your car into the driveway?  Well the good news is this is all doable.  And it doesn’t have to be expensive if you don’t want it to be.  Smart plugs are super affordable now.  You can pick these up for a about $40.  They can run on a preset scheduled &/or use your phones location to determine when to turn on an off.   If you’re really adventurous a lot of them can be paired with IFTTT service so you can have a light turn on and off according to the weather, or sunset / sunrise.   Whatever set up you decide is right for you it provides added security for you and your family.  It might just be enough to deter a burglar if they think someone is home.

Wifi Water sensor – Sometimes it’s hard to keep up with all the new technology that’s offered to homeowners.  One example of this is a wifi water sensor.  For less than $70 you can set up a smart wifi water sensor in your home.  Typically you would want to set this up in your utility room near your hot water tank and floor drain.  If it comes in contact with any water it sounds an audible alarm in the home and sends a push notification to any smart devices running the companion application (smartphone or tablet for example).  Being notified early on gives you a better chance of minimizing the damage caused.   If cost is no object you can also get systems that not only sound an alarm and push a notification but also physically shut the main water line off as well in the event it detects a leak.

Wifi camera system – Much like vehicle dash cams, insurers don’t yet offer discounts for wifi camera systems.  However that doesn’t mean they aren’t valuable.  These systems can send push notifications to any smart device running the companion application (smartphone or tablet) alerting you to motion within the home or surrounding property.  They are also great for pet owners allowing them to check in on their fur babies and some systems even allow for two way communication allowing you to talk to your pets. Prices start at about $75 and go up depending on how many cameras you want and what features you’re looking for.

There is a lot of really great tech products out there these days and they are all pretty affordable. They can make life easier and provide peace of mind.  And in some cases provide valuable data to the insurance company in the event of a loss.

Happy shopping…..

 

Sources:  Katetix.ca,   Huffington Post,   Telus

Insurance

Fall Safety Tips

yh-leaf

The days are getting shorter, the air is getting cooler, and the leaves are beginning to drop from the trees. Fall is officially here.  With proper safety precautions in mind your family can enjoy the crisp autumn weather while avoiding some of the dangers that come with the season.

When the weather turns cold most people start to spend more time indoors using fireplaces, furnaces and heaters to keep warm. There is nothing quite a cozy as a fire but it does present some safety hazards.  Be sure to keep these tips in mind to keep your family warm and safe.

  • Service Your Furnace – Before the cold autumn and winter weather sets in, be sure to call your local heating company to have your furnace serviced and inspected.
  • Use Fireplaces Safely – Keep that fire where it belongs by using a fireplace screen to keep sparks from flying out.  Never leave a burning fire unattended, and make sure its completely extinguished before going to bed.
  • Use Space Heaters Carefully – Space heaters are a great way to warm up a chilly room, but make sure you read the instructions on the heater before you use it. Make sure you maintain proper clearances around the unit to prevent fires.
  • Exercise Candle Caution – Candles are a great way to give a room a cozy warm feel, but they also cause fires. According to the National Candle Association there are almost 10,000 home fires each year in the US that started from improper candle use.  Never leave a candle unattended and always keep them away from pets and children.

There is nothing more beautiful than a drive out to Alberta’s Rocky Mountains in the fall, but this season brings with it some unique hazards for drivers. Being aware of potential dangers can keep you and your family safe.

  • Poor Visibility – Falling leaves, while beautiful, can obscure your vision. Shorter days are part of the season, meaning the sun rises later, sets earlier, and doesn’t get as high in the sky.   Make sure you have a good pair of sunglasses in your vehicle to wear when the sign is bright.
  • Children – The shorter days make it more difficult to see children playing, walking to school, and riding bicycles. Be aware of your limitations in visibility and slow down if you can’t see well.
  • Slow Down on Wet Roads – Rain, and wet snow is common during fall in Alberta. Make sure you keep a safe distance from the car in front of you.  Wet roads make it more difficult to stop quickly.  When wet leaves are on the road they make the road even more slippery and it can be hard to get good traction.

 

Insurance

Are all your eggs in one basket?

eggs object on a white background

Growing up we were all told “don’t put all your eggs in one basket”   This phrase is commonly (and some might say, incorrectly) attributed to Miguel Cervantes (in Don Quixote), but some sources have reported its usage as early as the 1600’s.  A similar proverb dating back to 1617 reads “he is a fool which will adventure all his goods in one ship”

Is it a Coincidence that expressions like this date back to the beginning of what is considered the modern insurance era?  Probably not.

Business owners were concerned with loss of their goods that were loaded on ships to be transported to customers.  The risk of losing everything in the event of a ship sinking or captured was too great.   One solution was to use extra ships and spread the load out. That way if a ship was lost you wouldn’t lose everything.   It was a costly solution that still carried a fair amount of risk.

In the late 1680’s Edward Lloyd opened a Coffee house on Tower Street in London.  It soon became a popular spot for ship owners, merchants and captains and thereby a reliable source of shipping news.   This was the birth of Lloyds of London and the first marine insurance market.

Generally putting all your eggs in one basket would be risky decision.  You won’t invest all your money into one stock would you?  But with insurance, it actually makes sense to put all your policies in one broker’s office.

Advantages of placing all your coverage in one brokerage:

  • You’ll develop a strong relationship with your agent. They will get to know you, what you need to protect and help identify risks that you may be exposed to.
  • You’ll benefit from a broker who access to a wide variety of insurance markets to ensure that you are getting the right coverage for your needs rather than just another cookie cutter policy.
  • You could benefit from decreased deductibles in the event you suffer a claim that involves more than one of your policies. For example a hail storm that damages both your home and automobiles.
  • You’ll benefit from increased discounts from having multiple policies insured together
  • You’ll have a trained licensed insurance expert working for you to aid you through the process of setting up new coverage, reviewing current coverage, or going through the claims process.
  • You’ll be treated as more than just another policy number. We understand that without our clients we wouldn’t be where we are today.
  • Reductions in the number of companies that have access to your personal information.

So call, click, or visit.  We will take good care of your eggs.