Read and review the class information then take the test below.
How to read an Insurance scope
A. Claim number
B. Item or location of replace
C. RCV-replacement cost value
D. Average life of line items
E. Usage for purpose
F. Depreciation-money removed from RCV
G. ACV-actual cash value. The money that the client will receive (minus the deductible)
H. Itemized list to repair or replace loss
I. Total cost to replace “B”
J. Summary of total claim
K. O & P. money due to contractor, if applicable
L. Total with O&P and tax
M. Deductible being subtracted
N. Amount recoverable after job is complete
O. Sales tax
P. How much the customer is actually going to get if all money is recovered minus the deductible
If you ever need to find the total cost of an area, like the roof, you will find the roof category “B” and find the total “I”.
Sometimes items are listed by location like left side, right side and front. That will make it difficult to find a total for a trade like gutters. In order to find the total, you would add the RCV of all line items involved.
Certain trades require labor minimums. Such cases exist when the job is too small to cover a trip charge for an installer to come out and complete the job. Example- a small wall repair may only cost 70 dollars to repair, but it takes 4 hours, due to how many times an installer has to come out to mud, sand and paint. The 70 dollars as it is estimated would not be enough to cover the cost of materials and labor. To cover this labor minimums are added to the RCV of that trade.
These Labor minimums are usually found towards the end of the claim, just before the summary page.
Other charges you need to consider are stricken out lines. In these cases, the lines are stricken out for two reasons: code upgrade charges/items or paid when incurred items (PWI). Code upgrade items are items that are required by the local governing authorities. Ice and water barrier, as an example, is required by a lot of cities. Normally an insurance company is not required for any items that were not already there, but these items are required to pass city inspection. Unless there is a specific code upgrades omission clause in the homeowner’s policy, the code upgrades are paid by the insurance company. PWI items are items that the insurance company agrees that they are necessary but are only going to pay them when the work is complete.
In both cases you will need to add them to the RCV total of the job they belong to. A quick way to do this is to add the items in the code upgrade or paid when incurred lines added in the summary section.
Supplements are items or whole trades that a contractor finds that are missing from the insurance scope. These items are necessary in order to return the property to before the loss status. Contractors like Northstar submit omissions or corrections as supplements to ensure the best and correct replacement of the homeowner’s loss.
Homeowners have the choice of what work they want done and when to have it done. Because of this freedom a customer may choose to only get a roof replaced but not the gutters. Since we are doing roof, the customer will get the RCV of the roof and only the acv of the gutters as there would not be a depreciation release of the gutter depreciation. Say a roof RCV is 10,000 and gutters ACV is 500 dollars. The customer would then receive 10,500 dollars minus their deductible. Homeowners could use this to effectively manage their out of pocket expense.
Take the following example. Say a homeowner has a bad roof leak and has filed a claim with his insurance company. They found damage on his roof and gutters that deem a replacement. His policy pays out the money listed above, and his deductible is 500 dollars. The homeowner does not have the money to pay his deductible at this time but desperately needs his roof replaced. The homeowner can choose to hire us to get his roof replaced. He can use the money received both as the acv from the roof and gutters and the depreciation of the roof to pay for a new roof without any pocket expense. He then at a later time (but still within 1 year of the loss date) can choose to get his gutters replaced. He would only be entitled to the gutters’ depreciation money with and invoice from an installer. He would not be entitled to any other money for the gutters as the ACV was already paid. If he chose not to replace the gutters any further damage on the gutters would not be covered as the insurance company had already paid to have them replaced.
Click the following Insurance Scope links A, B, C, & D to view and be able to answer questions on the test.