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| my questions about property insurance! |
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JBernstin
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1.00 Dollars($)
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 Posted: Thu May 08, 2008 10:39 am Post subject: my questions about property insurance!
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Hi, I have some questions regarding property insurance.
suppose my building gets destroyed by fire or any other accidental cause, is it necessary that it has to rebuilt the same way as it stood earlier? Now, in case I want to re-establish the original features following destruction, what do I do? JBernstin
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Lori
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Joined: 10 Sep 2007
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Location: Missouri
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Posted: Thu May 08, 2008 1:13 pm Post subject:
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Well you'd hire a contractor I guess...I'm not clear on your question...Some policys are for a set amount say 100k on the dwelling/building some have a 'guarantee rebuilding' endorcement...It would depend on the policy...Please explain your question a little deeper...
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Insurance Maze
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Joined: 16 Oct 2007
Posts: 429
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Posted: Thu May 08, 2008 3:33 pm Post subject:
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| Quote: | Hi, I have some questions regarding property insurance.
suppose my building gets destroyed by fire or any other accidental cause, is it necessary that it has to rebuilt the same way as it stood earlier? |
I, like, Lori, don't really understand what you are asking, but,
if your building is an older building (say 25 years old or older) and you are "grandfathered" by your local building codes, when your building is re-built it will have to be up to the building codes. This is where a lot of people get into trouble with commercial buildings and also private residences. They don't purchase the "Local Ordinances" endorsement and when a total loss occurs, there can be a huge difference between the amount the insurance company pays and the cost of re-construction.
| Quote: | | Now, in case I want to re-establish the original features following destruction, what do I do? |
Are you talking about something like an original movie set from "Gone With The Wind" or something?
If you have very expensive items, they really need to be "scheduled" in your insurance policy.
Not sure if I have answered your question, but I really don't know what the question is.
Maze
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JBernstin
Guest
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Posted: Fri May 09, 2008 5:02 am Post subject:
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| Quote: | | Are you talking about something like an original movie set from "Gone With The Wind" or something? |
It would be expensive to rebuilt it, since the structural designs are awesome.
JBernstin
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Slappy
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Joined: 01 May 2008
Posts: 27
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Location: Reading,PA
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Posted: Fri May 09, 2008 4:31 pm Post subject:
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| "specific structural designs" would of had to be covered under specific endorsements. Ie; crown molding on older homes are not covered but if you have a mirror wall and stated that then that would be covered. |
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InsTeacher
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Joined: 13 Aug 2007
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Posted: Fri May 09, 2008 7:18 pm Post subject:
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JBernstin asked:
| Quote: | | suppose my building gets destroyed by fire or any other accidental cause, is it necessary that it has to rebuilt the same way as it stood earlier? Now, in case I want to re-establish the original features following destruction, |
Great question, and it all depends on what type of homeowner's insurance policy form is in place. There are many different types of homeowner (HO) policies available, and so much of the coverage is based on specifically which form has been placed.
The predominant HO form is what's called the "Homeowners Special Form 3." This is a form that provides replacement cost coverage on your dwelling (the house) and other structures located on your property, such as a garage, etc. Your contents would have to have replacement cost added to the policy via endorsement on this HO form, but more and more insurers are including replacement cost coverage on what's called "unscheduled personal property" or "UPP". This automatic addition of coverage obviously affects the annual premium, but it is well worth that extra cost.
Slappy said:
| Quote: | | "specific structural designs" would of had to be covered under specific endorsements. Ie; crown molding on older homes are not covered but if you have a mirror wall and stated that then that would be covered. |
Sorry, not necessarily the case. HO-3 forms are specifically written on the replacement cost of the house. They are NOT based on what you paid for the home, how much the assessed value is, or what you pay your property taxes on. All insurers have replacement cost estimators that come into play when they initially write and insure your home, as well as provisions that take inflation into account and raise the amount of coverage automatically at renewal to reflect changes in costs. As well, the language in these forms states that the dwelling will be rebuilt with "like kind and quality materials" in most circumstances.
Now, if you have an older home that has older building construction techniques, such as lathe and plaster walls and similar "old world" craftsmanship, this would not normally be covered. They will use sheetrock instead of lathe and plaster---> they will utilize current construction methods as opposed to hiring a specialist at huge cost to come out and lathe and plaster, etc.
Another HO form, called an "HO-8" is commonly called a "market value policy" and is commonly written for homes that are older and have construction normally used on older homes. This could, with the proper placement and underwriting, replace with lathe and plaster- if you're willing to pay the premium. Most people don't care if sheetrock is used instead of that lathe and plaster. A wall is a wall, so to speak.
So- your "awesome" structural designs as you stated should be covered without any problems assuming that the coverage was properly written in the first place by your agent. As well, make sure that your policy includes the endorsement that will cover code changes, because the unendorsed policy will only pay to replace what you lost. In other words, if your home was built using 2x4 construction, and code now requires 2x6 construction, you're out of luck without the "law and ordinance" endorsement. This addition to the policy normally costs a bit more, but will take care of the extra cost associated with this kind of situation.
So, Insurance Maze nailed it on the head when he said:
| Quote: | | if your building is an older building (say 25 years old or older) and you are "grandfathered" by your local building codes, when your building is re-built it will have to be up to the building codes. This is where a lot of people get into trouble with commercial buildings and also private residences. They don't purchase the "Local Ordinances" endorsement and when a total loss occurs, there can be a huge difference between the amount the insurance company pays and the cost of re-construction. |
Finally, Maze also said:
| Quote: | | If you have very expensive items, they really need to be "scheduled" in your insurance policy. |
You cannot normally schedule what would be covered under the dwelling portion of the policy. Schedules and personal property floaters are associated with personal property, and most items would only need to be scheduled if there is an internal limit on coverage for certain items, such as jewelry, furs, and other things. Scheduling also alters the scope of coverage to an "open perils" basis, which is different than unscheduled property which only has coverage for certain, called "named" or "specified" perils. More on this if you need it! 
Let us know if there's anything else, and we will be glad to help! Sorry about the length of my post, but hopefully it actually helps if you haven't fallen asleep by this time! 
InsTeacher  |
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