Homeowner's Quick Guide to Insurance Restoration
Filing a homeowner's insurance claim can be confusing and stressful, but it doesn't have to be. It may seem complicated, but don't worry! Atex Builders has created a quick guide to help clarify insurance standards and terminology.
HCRI stands for Haag Certified Roofing Inspector. Contractors that are Haag certified are credible, effective, and knowledgeable. This certification validates a contractor’s ability to inspect and assess damage and awards them more authority than other, non-certified contractors.
IICRC stands for the Institute of Inspection, Cleaning, and Restoration Certification. Certified firms are expected to adhere to the IICRC code of ethics, possess valid insurance, and participate in continuing education training. This ensures that IICRC certified professionals will be aware of industry best practices and committed to the highest standards.
RIA stands for the Restoration Industry Association. This professional association publishes recommended restoration practices that are proven to be effective in a range of situations. These recommended practices are industry-tested and safe, promoting adherence to applicable codes and standards. Contractors who abide by RIA standards are committed to understanding the latest technology, methods, and best practices.
RCV, Depreciation, & ACV
RCV stands for Replacement Cost Value. This is the total cost of 100% replacement of an item. Depreciation is a decrease in value over time due to multiple factors such as age, use, and type of product. ACV stands for Actual Cash Value. This amount is the current value of the item, calculated as RCV minus depreciation. Most insurance estimates are written using the full RCV with depreciation factored in as a recoverable expense paid out by the insurance company once the repairs have been completed. Some insurance policies have non-recoverable depreciation and only allow disbursement of the ACV.
Xactimate is the leading software in property loss and reconstruction estimating. It is used by contractors and insurance adjusters to calculate costs of restoration projects. Xactimate price lists are updated monthly using a database of product rates compiled from more than 470 regions in the US, Canada, UK, and Ireland. This software allows contractors and insurance adjusters to estimate the cost of repairs quickly and accurately using a reliable source of pricing data.
When an insurance claim is filed, the insurance company sends an adjuster out to the property to inspect the damage and provide an estimate for repairs. The top part of the estimate will have the homeowner information, the adjuster information, and details about the claim. This is followed by a rough diagram of the property and a detailed list of all items to be repaired or replaced along with quantity and individual cost. Each item will also have RCV, depreciation, and ACV costs.
At the end of the insurance estimate is a summary of the estimate. Here you will find the total of all repair items plus sales tax, which equals the total RCV for the job. Once the RCV is calculated, the total depreciation is taken away leaving the ACV. The policy deductible is subtracted from the ACV resulting in the Net Claim. The Net Claim is the amount the insurance company will pay up front. The Recoverable Depreciation will be released once the job is complete.
Sometimes insurance adjusters and contractors underestimate the scope of damage or discover that additional items are necessary to complete the job adequately. When this happens, the contractor will make a request on behalf of the homeowner for additional funding from the insurance company. This request is called a supplement and is paid in addition to the initial amount of the claim.
If you have any questions about insurance restoration, feel free to contact Atex Builders! Our knowledgeable staff responds A.S.A.P. to all inquiries and is more than happy to provide the answers you need to process your insurance claim quickly and efficiently.