What Are My Limits When Rebuilding After An Insurance Claim Answered By Policyholder Attorney Bill Voss

Limits on Rebuilding When You Have an Insurance Claim

When your home or business is destroyed due to a calamity such as the destructive tornados that hit several Indiana and Kentucky towns recently, you would most likely be too traumatized to return to your home. You will most probably have a hard time sleeping peacefully when there are news of arriving tornados since you are scared that it will hit your home again.

For some people, the situation is even worse. Some insured's property are completely wiped out and destroyed by tornados, leaving people homeless.

When disasters like this strike, the initial reaction of some people would be to move out as far as possible and to relocate to a safer place. While some people would want to stay, some would rather leave to avoid having to go through a similar harrowing experience in the future.

People who want to relocate often rely on their insurance proceeds to help them rebuild their life and their home. Some people may be of the mistaken belief that they can relocate and rebuild anywhere and that such will be covered by their policy. While this may be covered by some policies, it is not always the case.

Here are some things to consider when you are thinking of rebuilding your home or business after a covered loss:

To be sure, check your insurance policy to know exactly what it covers. Most policies are not strict and would not require you to rebuild your home on the same spot and lot where your former home was built before it was destroyed by a calamity.
 
Compare the depreciated value as against the replacement value. In some instances, you may be able to claim more in replacement cost policies when you rebuild your home on the same spot where your former home was located. Some insurance policies might even pay additional percentage costs in order to cover rebuilding expenses.

While some policies will not require you to build on the same spot where your former house was built, it might have a provision that states that it will pay the replacement value of your damaged property only if you buy or rebuild your home in a place near your former house’s location.

In an ideal world, you should be able to solicit the help of the representatives of your insurance company to help you out in making the decision of whether to rebuild your home on the same location or elsewhere. However, you have to be careful when you do this. You should note that these representatives are expected to protect the interests of the insurance company. They might not be very helpful in interpreting the confusing provisions of your policy. They might even push you to go for an option that will reduce the proceeds they need to pay you. To be sure, consult an insurance claims lawyer who will protect your interests and advise you on the best course of action under your policy. These consultations are usually free so you don’t have to worry about additional expenses.