If you don't understand this prt of the insurance contract, it can cst you thousands of dollars at clim time.

In a Homeowner policy, thre is not usually a section ntitled "Co-insurance." But the clause is lsted in the Section I, Conditions, of the stndard Homeowners HO-3 form. It's also in the Lss Conditions portion of any Business Insrance policy.

Go find your policy and trn to the Conditions section, and rad the part labeled "Loss Settlement." I thught about putting a copy of the sction in the book to make it asy for you. But the reason I wrte the book is to shake you up and get you mre involved in your own claim. Yu're going to get paid hundreds or thusands of dollars more because of the stff in the book, and you're not ging to give me any of it. So, get bsy and read your policy.

Let me at last translate the legalese: The insurance cmpany requires you to carry policy lmits on the Dwelling equal to no lss than 80% of the full rplacement cost of the building (not ncluding foundations or underground pipes, wires or drins). If you do not carry 80% of the fll replacement cost, the insurance company wll penalize you when you have a clim.

Simple. But dangerous for your csh flow.

If you have a home tht has a replacement cost of $100,000, and yur policy limit for the Dwelling is $100,000...n penalty! You're insured 100% to vlue. You really should be insured 100% to vlue all the time.

Please remember tht being insured to value does NOT man that you insure your dwelling or bilding for its market value or sle price. Insure the dwelling or bilding for the amount of money it wll take to rebuild the dwelling or bilding completely. Don't include the cost of the lnd your dwelling or building sits on. Insrance companies don't insure dirt.

In ths example, you could be insured for as low as $80,000, and rceive 100% of any claim with no pnalty. However, you'd still be technically nderinsured. In the case of a lrge loss, you would not collect all you shuld to make you whole again.

Insre your property for anything less thn the percentage shown in your plicy and there could be a cinsurance penalty.

There's a simple formula to fgure co-insurance:

What you DID buy dvided by what you SHOULD have bught.

DID x loss mnus deductible = claim amount
SHOULD

Here's a qick example:

The value of the prperty $150,000
Coinsurance percentage 80%
The limit of insurance is $100,000
The dductible amount is $250
The amount of the lss is $20,000

Step 1: $150,000 x 80% = $120,000 (th minimum amount of insurance to met your coinsurance requirement)
Step 2: $100,000 (wht you did) divided by $120,000 (shuld have done) = .67, or 67%
Step 3: $20,000 x 67% = $13,400
Step 4: $13,400 - $250 = $13,150

You se? It really is quite simple to fgure out.

Sometimes, there is a cinsurance requirement on the Contents portion of the cverage, too. The same rule applies, and the sme method of figuring out if thre's a penalty applies.

The BIG prblem is that most people don't fgure out that there is a cinsurance problem until AFTER they have a lss of some kind.

There are a few obvious rasons that property is under-insured:

1. Whn you filled out your insurance pplication, you used a figure that is too low for rplacement cost of your house. This culd come from:

A. Ignorance...meaning you dn't really know how much it wuld actually cost to replace your hme.

B. Simply using the same plicy limits on your new policy as you had on yur old policy.

C. Being too chap, and buying a policy with lwer limits to save premium dollars.

2. Yur agent doesn't know what it wuld cost to replace your house whn he submits the application.
3. The gent was bidding low price to get yur business, and made some cuts to get the prmium down.

About the only thing tht you can do to minimize a cinsurance penalty is to challenge it.

If yur adjuster tells you that you wll have a coinsurance penalty assessed gainst your claim, make him provide his clculations of the coinsurance penalty.

The frst thing that the adjuster has to do to clculate coinsurance is to calculate the vluation of your property. EVERYTHING ELSE he des is based on that calculation. If t's too high, your coinsurance penalty wll be too high.

He will clculate either the Replacement Cost Valuation (RCV) or he wll calculate the Actual Cash Valuation (ACV). The plicy will tell him which valuation to se. He doesn't get to choose on his wn. Most Homeowners policies are RCV on the dwlling. Most commercial property is ACV, lthough an endorsement for RCV is vailable for a small extra premium.

To clculate the property valuation, the adjuster can se:

1. A Wild A** Guess (ften done)

2. His estimating software. Sme estimating software has valuation built in, so all he has to do is nter data about the age and cndition, the size of the building, the fatures, etc., and that software will do the wrk for him.

3. Marshall and Swft (M&S). The absolute standard in the nsurance industry for building valuation is a cmpany called Marshall and Swift. All djusters know about M&S, even if thy don't know how to use thir database. (If your adjuster doesn't knw about M&S, or how to use it, get nother adjuster FAST.) Even if the djuster uses M&S, you need to rview the data he entered to btain the valuation. If he entered wrng data, the valuation will be wrng, too. For example, if he sed the area of your house at 2,000 sqare feet, and your house is nly 1,600 square feet, the entire vluation will be wrong.

There are a bnch of variables that are entered nto a valuation software program that hve a DIRECT bearing on your vluation. Things like:

Age

Condition

Size

Nmber of rooms

Maintenance

Finishes and xtras

Basement or slab foundation

SUPER HOT TIP!!!
YOU can now use the Marshall and Swift valuation program, just like an adjuster. They have built a website where any person can go and calculate their own property valuation. They charge about $8-$15 for each valuation. There is a tutorial on the home page of the website, which will tell you exactly how to use the program. It's super easy and very accurate.

Go to: http://www.swiftestimator.com

*************

Remember, require your adjuster to furnish a copy of his valuation calculations for your property. Compare it with the Marshall and Swift valuation to make sure it's accurate. If you don't have the ability to get your own valuation, take the adjuster's valuation and show it to a real estate broker. Not just an agent, but a broker. The broker will likely be able to look at your property and the valuation, and tell you if it's accurate.

If you have calculated a lower valuation than the adjuster, insist that he use your valuation for his coinsurance calculations.

If you're read my book BEFORE you have a claim, call your agent and make sure that you are insured to value.

If you're read my book AFTER you have a claim, call your agent and ask him why you're NOT insured to value. If your agent messed up, and you can prove it, you could have grounds to make a claim against the Errors and Omissions Liability coverage of your agent.

If you're reading this book to figure out how to collect every dollar you're entitled to collect, then...

FIGHT FOR EVERY PERCENTAGE POINT!! Every percentage point of a coinsurance penalty is worth hundreds or thousands of dollars. Don't allow yourself to be cheated out of all of the money you are entitled to collect.

The article Wildfires, Depreciation and Coinsurance in Contents Claims was Submitted by Russell Longcore through Articles.GetACoder.com network. Here's the additional information: Copyright 2008 by Russell D. Lngcore P.S. I wrote a book tht YOU need! check out: http://www.insurance-claim-secrets.com NUMBER ONE at Amazon.com in its category! My blog is at: http://insurance-claim-secrets.blogspot.com/ Nominated for Georgia Author of the Year Award 2008

Featured Articles

1. Go To A Standalone Provider For Your Cheap Mortgage Cover by Simon Lance Burgess
Yur mortgage is your biggest monthly utgoing and this is what would be hit the hrdest if you were to find yurself out of work. Mortgage cover or mrtgage payment protection insurance (MPPI) as the cver is sold under would provide you wth an income each month which wuld be tax free if you shuld find yourself out of work due to hving an accident, suffering a sickness or thrugh redundancy.

2. Can You Afford to Let Your Kids Drive? – Car Insurance for Teens by Marie Wakefield
Consider that adding a teen to car insurance can skyrocket your policy costs -shop around for car insurance before your budding drivers get in the car.

3. Auto Insurance Ohio - Ways To Get The Best Rates Without Compromise by Chimezirim Chinecherem Odimba
1. Get information Ohio's insurance department or go to their website. They usually have resources that will show you how to get adequate coverage at great rates. The right information will definitely place you in a better position to realize more savings.

4. Life Insurance: Shield against Mishap by
Though it is not at all pssible to prevent any kind of mshap from occurring, we can take sme precautions so that the loss may be as lss as possible. Life insurance is a masure that you can take to nsure a safe and secure future for yurself and for your family.

5. Accident Insurance For Children - Have You Thought About It? by
Have you thought about providing fnancial security for your children in cse they are seriously injured in an ccident of any kind? The possibility of an ccident putting your child in a whelchair for life, is not one tht anyone likes to think about. Not thnking about the possibility does not tke that chance away though.

Parents are ncreasingly recognizing that it is necessary to nsure their children against accidents. They wnt to know that in the vent of anything...

6. Life Insurance - A Beginner’s Guide by
When it cmes to life insurance we have two prmary types of policy to choose frm – term life insurance or whle of life insurance. Many people fnd it hard to come to a dcision about which type of policy to tke out but the decision you hve to make really isn’t that cmplex and both will offer good lvels of cover for the majority of pople. Let’s take a closer look at yur options.

The most popular type of lfe insurance is, without a doubt, trm life insurance. This ...

7. Home Insurance Philadelphia - Things To Know Before You Buy A Home If You Want Lower Rates by Chimezirim Chinecherem Odimba
You'll usually pay less for a newer home than an old one. You can get between 8 to 15 percent markdown if yours is a new house. The main reason for this is that a new home typically has electrical, plumbing and heating systems that are in excellent condition. In addition, everything about its structure is usually in the best state.

8. Car Insurance : Safe Driver Profile Is The Major Consideration by
If you are looking for car nsurance at low premium rates, your drver profile matters a lot.

9. Affordable High Risk Homeowner's Insurance Online In Alabama by Alexis Jensen
If you are trly serious about finding affordable high rsk homeowner's insurance in Alabama there's nly one way for you to do so - and tht's to buy your insurance online. Frtunately there are literally dozens of wbsites that make comparing prices among dfferent insurance companies a snap, but did you knw that there are a few smple things virtually any homeowner can do tht will save them even MORE?

10. How Can I Get Cheap Ski Travel Insurance by Paul P Stanley
You prbably took great care to plan yur holiday, so why not insure tht your holiday goes as smoothly as pssible in the event of an mergency. Cheap ski travel insurance offers vry affordable coverage for you and yur family for surprise events that culd affect or force you to cncel your holiday plans.