My insurance claim does not cover all of my costs. What are my options?
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Asked January 14, 2013
Unfortunately, it is fairly common for someone to file an insurance claim, only to find out that the settlement is not enough to cover the cost of the repairs that need to be made. When this happens, you have the option of disputing the settlement in the hope of getting the repairs made, but there is no guarantee that doing so will result in getting a higher settlement.
In the case of a car insurance claim, you probably will not be able to get the settlement increased. The reason is a simple one, and relates to the fact that a car's value depreciates quickly and depreciation begins as soon as the vehicle is driven off the car lot. In a situation where the car is being financed, your best solution is to carry a special type of insurance rider, called General Auto Protection or GAP insurance coverage for short. This will not help you with making repairs, but it will pay off the difference between what you owe and the depreciated value of the car.
Where a homeowner's policy is being used, your settlement will be based on the type of policy you purchased. If your policy was written for Actual Cash Value, then your claim will be settled for the depreciated value of the property, and may not be sufficient to cover all of the repairs to the home. A better idea, even though it will cost you a little more, is to make sure your policy is written for Full Replacement Value, which will pay for the cost of repairs regardless of the depreciated value of the home.
Planning ahead is your best recourse for a situation where the settlement is insufficient to cover the cost of repairs. Read through your policy carefully and make sure that it contains wording which guarantees repair or replacement to original condition. If your policy does not contain such wording, contact the insurance company and voice your concerns, then ask the agent you speak with how your policy can be modified to give you more complete protection.
Answered January 14, 2013 by Anonymous