10 Must-Know Terms when Preparing an Insurance Restoration Claim
Comprehensive insurance cover protects your multifamily rental property against huge financial losses arising from theft and damage by storms, fire, and other perils. It helps property owners and investors cover their property restoration costs against daily wear and tear, risks, or damage. Being a multifamily property investor, it is important to have thorough knowledge of your insurance policy and a few terms related to it. To help you get started, here are a few terms that will help you understand your insurance restoration policy and claims. Read on.
1. Actual Cash Value (ACV)
The actual cash value is the value of your insured property calculated by subtracting the cost of depreciation from the replacement cost.
2. Additional Living Expenses (ALE)
Additional living expenses are the amount given to a policyholder for food, temporary accommodation, and other essential expenses if their home suffers damage and becomes temporarily uninhabitable due to a covered peril.
An appraisal is an evaluation of a property value or the extent of its damage. This estimation is made by an authorized person. Many insurance policies offer an appraisal process to settle claim disputes. The process involves two damage appraisers, one of them appointed by the policyholder and another by the insurance company. These appraisers choose a third appraiser that gives neutral judgement during the entire procedure. The appraisers evaluate and review your claim and the third appraiser rules on any difference of opinion. The policyholder and the insurance company are bound to abide by the third appraiser’s decision but only for the loss amount.
4. Cash Surrender Option
Cash surrender option is a choice given to a policyholder to suspend the insurance coverage and receive full net cash value.
5. First-party Claim
It is a claim filed by an insured owner of a property against their own insurance policy.
6. Inflation Protection
It is an insurance policy feature that provides benefit to the policyholder to keep abreast with the inflation rate. In this policy feature, the home insurance policy limits increase to keep up with the increase in property repair and rebuild costs.
7. Liability Coverage
The liability coverage protects policyholders against financial losses for which they are legally liable.
8. Market Value
The current price that your home, including land, would yield in the market.
Non-renewal is a decision taken by an insurance company to non-renew or cancel your insurance policy.
The peril is the possible risk or cause of damage and loss to your property against which an insurance policy is purchased. The risk or cause could be a fire, flood, windstorm, or theft. An insurance policy that provides cover only for the risks mentioned is called a named-peril policy. Whereas an insurance policy that covers all risks and causes of loss except the names that have been excluded in the policy is called an all-risk policy.
It is important for multifamily property owners and investors to insure their properties, as it secures their investments from heavy financial losses. Besides an insurance company, you also need reputable professionals such as United Renovations to help you with the insurance restoration claiming process. We have a team of experienced and knowledgeable professionals that will directly communicate and coordinate with your insurance provider to help you get an appropriate and timely settlement. If you have more questions on our insurance claims support and property restoration services, call us at (972) 432-6922 or fill out our contact form.