California Insurance

Insurance sell many representatives of owners policy as a “replacement” policy, with the promise they pay for the replacement of a house seriously damaged. But a close reading shows that these measures are much weaker than the term implies.

Insurers, the replacement cost excludes any costs for compliance with building standards, which do not exist, if a house was built. This exclusion, deeply immersed in the small copy of the policy, often 30 pages long, is regarded as “the rule or law” clause.

The exclusion also applies to a “guaranteed replacement cost” policy, a product promising even more costly to cover excessive costs, typical of a disaster.

The financial contribution of the difference between a house like it was and on reconstruction in compliance with building regulations can be lengthy, margins money from family budget, so close.

Charles B. Poole, owner of a house in Saga Bay, FL development hardest hit by Hurricane Andrew in 1992, was among those who learns the hard Tour provision of these policies. Because the hurricane damaged his house was built in a flood plain, flood insurance required by federal rules to lift several feet, on an expenditure of $ 50000 more than $ 120000 replacement cost coverage its policy.

“Like many other people around us,” said Poole, “we are at the end with the insurance settlement of our political content to cover the costs of increased home.”

The additional costs incurred in the implementation of building codes is a general rule, unless Mr. Poole’s Fall. Still, mounting losses from earthquakes, hurricanes and other storms create insurance companies, strict rules of construction of a possibility to limit their losses.

Replacement for payment also depends buy enough insurance - at least 80 per cent of the estimated market value - to avoid depreciation deductions. For old houses, which could cost more to reconstruction, as they are now in value, the amount of insurance could exceed the market value, but insurers, a payment will be complete only if the money for reconstruction .

Les Etats-owner of the association advises owners or owners to ask officials of local government on changes in building regulations in their field. Jordan Clark, director of the association owner of the house, said: “We encourage them to continue reporting to meet construction, especially if they are located in a sector which is more vulnerable to disasters.”

Insurance companies can own their policies and to strike, regulation or law clause. The problem, “said Jill Cunningham, a spokesman for the Florida Insurance Department,” most people want the best purchase of political power, and there is no way they are going to describe one of the agents’ insurance, dozens of possible changes, the fundamental policies. ”

1 in early June, Florida is a standard replacement policy, documents 30 pages long, in order to reduce costs for compliance with the standards of newer construction, up 25 per cent of basic of politics.

Mr. Poole, this policy would have standard $ 30000 additional cost of $ 50000 Consumers can refuse coverage or extra. The cost of additional coverage in Florida, is estimated at 5 per cent of the costs of basic policy, about $ 20.

All is not lost for homeowners, as Mr. Poole. In one case, on appeal, Florida State Court recently ruled that State Farm was forced to pay fees for the standards of construction, if payments repair or replacement guaranteed.

A house that does not meet building regulations can not lawfully held, the judge noted. That is why the farm state is not fulfilling its promises to cover the “equivalent design for the same purpose.

Other insurance companies are also regulators of the problem. In Texas, the Office of Public Insurance Counsel, an agency of the independent state, recommended that the code of building exclusion are removed. In California, regulators last year for the revision of rules on advertising for the home owner. So far, at least consumers in other countries must be on the alert.