By Lisa Jilbert
When a person loses all or part of their belongings, also known as personal property, in a home disaster, they often come to realize their belongings were just stuff. That being said, there is a very important financial flip side to just stuff. One of the greatest gifts the cleaning manager, Mike, gave to me was sound advice. He told me over and over and over at the very beginning, “Mrs. Jilbert, EVERYTHING has value.”
The purpose of insurance is to make an insured whole after a loss in accordance with the insured’s policy. The purpose of insurance is not to make money and come out ahead, nor is it to leave the insured partially put back together. Mike was relentless in making sure I heard him, even looking me straight in the eye to confirm I was listening, because I was actually in shock and not processing everything I was hearing. EVERYTHING has value. Document everything. When I looked around at all of our burned and damaged belongings, one of the first impulses I had was to remove it all as quickly as possible. I did not see value. I saw destruction. I wanted every burnt item and every piece of char removed from our once beautiful home – now, yesterday. I just wanted it out. Every item served as a reminder that our lives had forever been altered. I felt the sooner we removed the items, the sooner we could move forward. We also could not remove anything until the adjuster gave us the go ahead to remove items. Technically, the items we sent out for cleaning were still ours. The items we were throwing out became the property of the insurance company, because they paid us for those items. In addition, our claim had quickly been passed over to a “large loss” adjuster. A “large loss” does not just represent a high dollar loss, but complexity to the loss. We had to find a place to live, a home to rebuild, and replacement of our contents to figure out. The next few years would be busy. (Yes, years.) We had to wait for permission from the adjuster to start removing items. We also needed to understand how to account for each of those items.
Why does EVERYTHING HAS A VALUE matter? Because the value of those items directly correlates to a family’s financial well-being. The red blouse is not just a red blouse. The blouse may have been purchased from a local discount store, or the blouse may have been purchased from Saks Fifth Avenue. There is a difference. The difference shows up when an insured is paid for items lost. The cost to replace items adds up extremely fast. Underwear, socks, shirts, shoes, forks, plates…. The list is extensive. Have I mentioned I hate shopping? The universe is funny that way. It is up to the insured to know the difference and to ensure these small details are communicated. Details can mean unnecessary money out of the insured’s pocket or money not properly reimbursed, because the insured did not properly document their possessions.
Like any industry, insurance has a lot of terminology. What is Replacement Value? Actual Cash Value? Why does that matter? Replacement Value means that the insurance company will pay for an item to be replaced. Actual Cash Value represents the value of an item today. It matters to know the difference between replacement value and actual cash value because it affects how much money an insured receives for their items.
As an example, an insured has a Cash Value policy and loses a 20-year-old maple dining room table with a cash value of $900. The insured is reimbursed $900 for the table regardless of the cost to replace the table. However, if the insured has Replacement Value in the policy and the insurance company places a value of $3,000 to replace the item, the insured(s) will receive up to $3,000 for the replacement of the table. If we look a little closer and the insured decides to buy a table that costs $2,500, the insured with Cash Value coverage only receives $900 for the table and will have to pay an additional $1,600 for the table out of pocket. The insured with Replacement Value will receive $2,500 for the table. Keeping receipts becomes very important when the dispute of the cost to replace an item arises. Chances are this will happen for a few items. Help your adjuster and yourself by having old receipts in emails or fireproof/floodproof boxes. At least for items you really care about. Stores often have records that go back years for major purchases.
Table: Reimbursement of Personal Property. For illustrative purposes only.
| Replacement Value | Actual Cash Value | Cost of New Item | Total $ Insurance Payment – Actual Cash Value on Policy | Total $ Insurance Payment – Replacement Coverage on Policy |
| $3000 | $900 | $3000 | $900 | $3000 |
| $3000 | $900 | $2500 | $900 | $2500 |
| $3000 | $900 | $4500 | $900 | $3000 |
| $3000 | $900 | Insured chooses not to replace | $900 | $900 |
What if an insured does not want to replace everything? Chances are an insured won’t want to replace everything for various reasons, including the time and energy invested to replace items. However, everything has value. They are not required to replace the items, but if they are not reported the insured will not collect anything for the value of the items. If four dolls have an actual cash value of $10 each, but cost $50 each to replace, an insured may be just fine with receiving $10 each, or $40 total for the dolls. The insured won’t ever see the difference of $160, but that is fine because they don’t want to replace the dolls. Because everything has value, the value is in claiming the items and receiving the $40 of actual cash value versus not receiving anything at all.
Insurance can be confusing. Understanding your benefits on your policy can be confusing. We learned first-hand how important it is to have a thorough inventory of items. There are still items I will suddenly remember we had that disappeared in the ashes. That is okay, we did the best we could. As overwhelming as the process can be, there are people available to help in an unfortunate circumstance. While I inventoried every item, not everyone can, should, or wants to go through that process. There are companies that will, for a fee, inventory your personal contents. Ask for help. Accept help. I hope if you are ever in the situation we were in, you have a Mike in your corner to remind you everything has value.
Gratefully,
Lisa
Copyright 2019 Lisa Jilbert
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