Must I rebuy item to be covered?

[Subjection]

What is the name of your state (only U.S. law)? IL

I'm asking this question for my brother, who is looking for renter's insurance, which I believe has the same basics as homeowner's coverage pertaining to personal items.

What my brother would like to know, and I can't seem to find the answer using Google, is whether or not something has to be replaced in order to be covered. Example: If my brother owns the original version of the Sony Playstation game console (worth almost nothing now) and it gets destroyed in a fire in his apartment, my understanding (and his too after talking to an agent) is that they'll cover the cost if he buys the most basic version of the PS currently available in stores. Right now, that is the Playstation 3. Now, he wants to know what the insurance company would do if he decided he didn't want to buy another game console. My understand is that they just give him the money for what it would cost to buy a PS3. But his understanding after talking to an agent is that he would only get the money if he were to actually buy a new game console.

Can someone help me with how this works? I actually used to work in a claims processing center for insurance companies at one time and was involved in finding prices of comparable items to what insureds had lost, although I never knew what happened if the insured never decided to actually buy that item again. Do they just get the money for the new item even if they don't buy it? If that's the case, why do they say that they replace the item rather than saying that they pay to replace the item?

I had the same confusion with my own policy (home insurance). I was asking my agent about how it works and he said they would pay to rebuild my house if it burned down. I never did get it clear about what I'd get if I decided to either move into an apartment, or simply buy another house that was already built. Would I get the cost of the new house (could be less), or would I simply be paid what it would cost to rebuild what I have now, even if I don't rebuild?

 

[Zigner]

What is the name of your state (only U.S. law)? IL

I'm asking this question for my brother, who is looking for renter's insurance, which I believe has the same basics as homeowner's coverage pertaining to personal items.

What my brother would like to know, and I can't seem to find the answer using Google, is whether or not something has to be replaced in order to be covered. Example: If my brother owns the original version of the Sony Playstation game console (worth almost nothing now) and it gets destroyed in a fire in his apartment, my understanding (and his too after talking to an agent) is that they'll cover the cost if he buys the most basic version of the PS currently available in stores. Right now, that is the Playstation 3. Now, he wants to know what the insurance company would do if he decided he didn't want to buy another game console. My understand is that they just give him the money for what it would cost to buy a PS3. But his understanding after talking to an agent is that he would only get the money if he were to actually buy a new game console.

Can someone help me with how this works? I actually used to work in a claims processing center for insurance companies at one time and was involved in finding prices of comparable items to what insureds had lost, although I never knew what happened if the insured never decided to actually buy that item again. Do they just get the money for the new item even if they don't buy it? If that's the case, why do they say that they replace the item rather than saying that they pay to replace the item?

I had the same confusion with my own policy (home insurance). I was asking my agent about how it works and he said they would pay to rebuild my house if it burned down. I never did get it clear about what I'd get if I decided to either move into an apartment, or simply buy another house that was already built. Would I get the cost of the new house (could be less), or would I simply be paid what it would cost to rebuild what I have now, even if I don't rebuild?

Your brother should speak to his insurance agent. If he doesn't get (or understand) an answer, he should keep asking.

 

[ecmst12]

Even if the policy covers replacement cost, I'm not sure you'd be able to get the cost of a new PS3 compensated for the loss of a PS1. But that would be settled at the time of a claim. In no case would you be required to replace the item though, and that would be the case for any property item you put in a claim for that you don't have a loan on (different for a car that isn't paid off for example).

When it comes to the destruction of an entire house, that's a much more complicated situation and you should just hope you never have to deal with it.

 

[LdiJ]

What is the name of your state (only U.S. law)? IL

I'm asking this question for my brother, who is looking for renter's insurance, which I believe has the same basics as homeowner's coverage pertaining to personal items.

What my brother would like to know, and I can't seem to find the answer using Google, is whether or not something has to be replaced in order to be covered. Example: If my brother owns the original version of the Sony Playstation game console (worth almost nothing now) and it gets destroyed in a fire in his apartment, my understanding (and his too after talking to an agent) is that they'll cover the cost if he buys the most basic version of the PS currently available in stores. Right now, that is the Playstation 3. Now, he wants to know what the insurance company would do if he decided he didn't want to buy another game console. My understand is that they just give him the money for what it would cost to buy a PS3. But his understanding after talking to an agent is that he would only get the money if he were to actually buy a new game console.

Can someone help me with how this works? I actually used to work in a claims processing center for insurance companies at one time and was involved in finding prices of comparable items to what insureds had lost, although I never knew what happened if the insured never decided to actually buy that item again. Do they just get the money for the new item even if they don't buy it? If that's the case, why do they say that they replace the item rather than saying that they pay to replace the item?

I had the same confusion with my own policy (home insurance). I was asking my agent about how it works and he said they would pay to rebuild my house if it burned down. I never did get it clear about what I'd get if I decided to either move into an apartment, or simply buy another house that was already built. Would I get the cost of the new house (could be less), or would I simply be paid what it would cost to rebuild what I have now, even if I don't rebuild?

I will give you a real life example.

My home got robbed some years back. Some things were given full replacement value, other things were given a very small value but I could have received additional payment had I actually paid to replace the items.

For example, I got full value for my electronics, but I got peanuts for the DVD collection they took. My insurance company would have given me more for the DVDs had I chosen to replace them, but I did not.

 

[FlyingRon]

Generally you don't have to actually buy the replacement item but it may be hard to convince the insurer what the replacement cost would be if you don't.
As for the specifics, you'd have to read the policy. A tree fell on my lawnmower. I went to a distributor for the particular model I had and got a price quote and forwarded that in. I got a check. Nobody asked what I was going to spend it on.

 

[Subjection]

Generally you don't have to actually buy the replacement item but it may be hard to convince the insurer what the replacement cost would be if you don't.
As for the specifics, you'd have to read the policy. A tree fell on my lawnmower. I went to a distributor for the particular model I had and got a price quote and forwarded that in. I got a check. Nobody asked what I was going to spend it on.

I used to work for a third party insurance administrator and had the job, along with a team of other people, of looking through claims of personal property and going online to look for real-world examples of those items to quote a replacement price. I don't know if all agencies do it that way. If a specific make and model of an item was specified, such as Sony 46" model XXX LED TV, then that's what we'd have to find an example of. If the insured only specified a 46" TV, then we'd look for the cheapest TV of that size. If they specified Sony 46" TV, then we'd look for the cheapest Sony TV of that size.

I guess the key is to be as specific as possible when filing a claim. That's why it's good to know the make and model of everything you own. Keep that list somewhere safe.

 

[Subjection]

I will give you a real life example.

My home got robbed some years back. Some things were given full replacement value, other things were given a very small value but I could have received additional payment had I actually paid to replace the items.

For example, I got full value for my electronics, but I got peanuts for the DVD collection they took. My insurance company would have given me more for the DVDs had I chosen to replace them, but I did not.

Do you think you could have gotten more if you were simply able to prove that items you got small amounts for were actually worth more based on a quote for the actual price it would have costed you to buy them again?

 

[ecmst12]

No. With a receipt, maybe.

 

[justalayman]

What my brother would like to know, and I can't seem to find the answer using Google, is whether or not something has to be replaced in order to be covered. Example: If my brother owns the original version of the Sony Playstation game console (worth almost nothing now) and it gets destroyed in a fire in his apartment, my understanding (and his too after talking to an agent) is that they'll cover the cost if he buys the most basic version of the PS currently available in stores. Right now, that is the Playstation 3. Now, he wants to know what the insurance company would do if he decided he didn't want to buy another game console. My understand is that they just give him the money for what it would cost to buy a PS3. But his understanding after talking to an agent is that he would only get the money if he were to actually buy a new game console.

Can someone help me with how this works? I actually used to work in a claims processing center for insurance companies at one time and was involved in finding prices of comparable items to what insureds had lost, although I never knew what happened if the insured never decided to actually buy that item again. Do they just get the money for the new item even if they don't buy it? If that's the case, why do they say that they replace the item rather than saying that they pay to replace the item?

it will depend solely on what your policy says. If it says it pays replacement value, then it reimburses you when you purchase a replacement. If it says it pays cash value, they will pay you the cash value of the lost item.


It can be very different than when you are damaged as you are in an car accident. In that situation the other party is liable to you for the loss in value with no requirement you repair the damage or replace the car. In a homeowners situation, the policy can provide for a replacement of the lost item rather than payment of the value of the lost item. It is simply a contractual matter. They have no liability to you for the value of your loss such as when another party caused your damages.

it is explained in this handy FreeAdvice informational page:

http://insurance.freeadvice.com/information/home/article/294

 

[Subjection]

it will depend solely on what your policy says. If it says it pays replacement value, then it reimburses you when you purchase a replacement. If it says it pays cash value, they will pay you the cash value of the lost item.


It can be very different than when you are damaged as you are in an car accident. In that situation the other party is liable to you for the loss in value with no requirement you repair the damage or replace the car. In a homeowners situation, the policy can provide for a replacement of the lost item rather than payment of the value of the lost item. It is simply a contractual matter. They have no liability to you for the value of your loss such as when another party caused your damages.

it is explained in this handy FreeAdvice informational page:

http://insurance.freeadvice.com/information/home/article/294

Thank you for that link! I haven't seen it described in that kind of detail before. The part where it says:

Replacement cost pays to replace the item: If your homeowners insurance policy has replacement cost coverage, you will be paid for the cost to replace the item. HOWEVER, it is paid only when the item is replaced! Therefore, you will first get the actual cash value of the item, and if end up buying a replacement then you will get the balance of what the item was worth. You must keep all your receipts as proof of the replacement cost.

On my own home, I have replacement coverage, but I wasn't aware that if something was destroyed, I still only get the "actual cash value" unless I buy that exact item as a replacement. That kind of sucks! There are many things I have that I wouldn't replace exactly with the same thing. For example, my computer is several years old and I'd be buying a more recent model as a replacement. The cash value of my current one would probably be next to nothing, being that it was a bottom-of-the-line computer when I bought it. Also, my TV is an older CRT type, which isn't made anymore. The list goes on.....

 

[ecmst12]

It really depends on your specific policy. You should read it.

 

[Subjection]

It really depends on your specific policy. You should read it.

Oh trust me, I have. But even reading what it says leaves many questions. It may possibly be intentionally vague in order to give them some wiggle room. But my original question was about how rental insurance works--in this case, for my brother. He doesn't have a clear understanding of the terms either even though he did meet with the agent he'd be dealing with. Sometimes agents use vague language to avoid locking themselves into an agreement. When I was asking my agent about what I'd get for my house if I decided not to rebuild, I ended the phone call not understanding the answer. Finally, I went to his office one time and used a voice recorder so I could later review what was said and figure out what he meant. It turned out that he was never actually answering my questions, but rather changing the subject. When I directly asked, "What would I get if my house was just over half destroyed and had to be demolished rather than rebuilt (due to being a noncompliant home) and I ended up just moving to another prebuilt home?" His answer was, "Well, we've never had a situation like that because we've always been able to work with the city to rebuild even in that type of situation".

So I decided to go to city hall and ask the person in charge of such things. I told him what my agent said, and he basically replied that it wasn't true, and that I wouldn't be able to rebuild. In other words, the agent lied to me and never get me a straight answer. As of now, I still don't know what I'd get in the situation I described.

 

[ecmst12]

An agent is not the right person to be asking. You'd need to ask the claims department. Agents have nothing to do with claims.