An investor just blew $45,000. Want to know why?

[Timothy W.]

An investor who had a fire at their property had full insurance coverage on the loss, the policy was in force, had about $90,000.00 in damage, had a limit of insurance of 1.5 million dollars, and was a clear cut case of a covered loss that should have had a full payout less the 5k deductible. However, the investor blew $45,000.00 of the insurance payout by doing one thing wrong. Care to know what that is?

[Bill Gulley]

Maybe it wasn't fair since I was an insurance agent in P&C, and as Tim points out, it's the replacement value.

About the only thing you can do is to review your policies annually. I insure to 90% of the replacement value, as long as you are over 80%, the clause does not kick in and losses are paid at 100% on my policies. The other thing is to send a letter to you company and insurance agent, registered, return receipt requested and keep the receipt. This letter instructs the company and agent to notify you of any change in valuation of the insured property, since only they will know if the MS analysis changes at any time. If it does change and they fail to modify your policy to reflect the proper amount, it's on them!
You agent then has a responsibility to keep your policy current to its replacement value.