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Linda (Linda)
Posted on Wednesday, July 12, 2000 - 4:40 pm:   

Tom, it seems we all all correct but after all our input, we must remember on a "cat" definitions have been known to change (more than once at the same storm). An insurer may not "total" a structure until the repair exceeds 20% of the policy limits. As with autos, parts and pieces can far exceed the replacement value, however, many policies provide for an estimate to repair or replace. So you sometimes have to do both; estimate repair and obtain pricing for total replacement in order to compare the costs.

Bottom line appears to be as varied as the states, policies and storms.

Some companies want the "20% over" as the final $ figure to compensate the adjuster who is paid on a component schedule of a percentage of the loss.

An insured can argue that the insurer owes them a full and complete estimate to repair/replace regardless of the policy limit in order that the excess may be deducted from the insured's IRS dues. Again, depends on policy language and definition.

There is no one answer to fit all situations.
Jim (Jim)
Posted on Tuesday, July 11, 2000 - 12:46 am:   

Tom Joyce also makes an excellent point worth remembering.

One other thing the adjuster should remember as well, is that the 5% extension of coverage for debris removal can (under the right circumstances) apply to each and every one of the coverage limits; to wit, Coverages A, B and C.
Tomj (Tomj)
Posted on Tuesday, July 11, 2000 - 12:24 am:   

Also remember that the 10% APS can roll over and increase the basic limits on many HO. Example if the home is insured for 100k and is a total loss, and there is no APS involved, the additional 10% can roll over to the the dwelling. Not often out there but seen in some of the premium HO policies
Jim (Jim)
Posted on Tuesday, July 11, 2000 - 12:07 am:   

Tom, I agree with Linda, that when policy limits are reached, there would be a TOTAL LOSS.

However, it is important to look further, especially in valued policy states where the amount of insurance coverage may be in excess of building cost.

It is also important to look further when there remains a reasonable portion of the damaged property upon which to rebuild.

In general, the courts have been fairly consistent in applying the following general rule:

Whether a building is an actual total loss depends on whether a reasonable and prudent owner, uninsured, desiring to rebuild, would have used the remnant for restoring the building.

A building does not have to have complete and total collapse of roof or walls to be a "total loss." When for all practical purposes, the above test is met, then the loss is a "constructive total loss" which means the carrier and adjuster treat it as a total loss for policy and coverage purposes.

Perhaps a more pratical or workable definition of constructive total loss is "a partial loss but where the damage is so extensive that repairs would cost as much or more than the property is worth, or the limit of insurance of the policy."

In other words, if the loss is a "constructive total loss" by legal definition either by statute or case law, then the operative determination will be the proscriptions of law and not a repair to value ratio as exemplified by an estimate.

It is generally important and safe as well, to ask the carrier in the particular state in which you are working and where the loss is located.
Linda (Linda)
Posted on Monday, July 10, 2000 - 11:44 pm:   

Tom, it is my belief and understanding that a TOTAL LOSS is based on the policy limits. Once the repair/replacement exceeds the policy limit it is considered a total. You can total one limit without totaling all.

Example: You could total a dwelling by definition of repair exceeding policy limits and at the same time NOT totaling the appurtenant structures, contents, ALE, etc.
Tomotexas (Tomotexas)
Posted on Monday, July 10, 2000 - 8:59 pm:   

What according to policy language,definition,amount of estimate, etc. is a risk considered a total loss?
You comments are more than welcome.

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