Why won't my insurance company replace our cabinets with equal cabinets?

Question

We had a house fire a couple of weeks ago and it destroyed our kitchen. The insurance guy told us that we had top of the line cabinets and that we would get the same quality when we replaced them. Now he is telling us we are getting a lower value of cabinets. The company who is working on our house says they estimate the cabinet value a lot higher (for being oak and custom). Our policy says we have replacement value and we are getting less than replacement value. What can I do? Also, is it possible to get wood floors to replace the carpet that the cleaning crew needs to rip up, replace the pad, and then re-lay the carpet? And advice would be greatly appreciated.

Answer 1

Replacement Value means just that.  You either get the cash for the value that the insurance company determines or "like kind and quality."  Honestly, I would fight this and HARD.  You had something "Top of the line" and your insurance company should pay for the replacement of "Top of the line."

With regard to the Hard woods.  Again, discuss with your insurance company.  Ask if they will issue payment for the cost of the tear out, removal, and replacement.  Any difference in cost between the carpet replacement and the installation of hardwoods would be on you.

Good luck and God Bless

EDIT - Who is your insurance provider if you don't mind asking...

EDIT - Amust...it's Replacement Cost (RC) OR Actual Cash Value (ACV).  Not a combination or the two.  You should know better being an adjuster.  C'mon!

"What Does "Replacement Cost" Mean?

The term "replacement cost" is defined or explained in the policy. Simply stated, it means the cost to replace the property on the same premises with other property of comparable material and quality used for the same purpose. This applies unless the limit of insurance or the cost actually spent to repair or replace the damaged property is less. Refer to your policy for the exact definition and explanation of replacement cost.

What is "Actual Cash Value"?

The term "actual cash value" is not as easily defined. Some courts have interpreted the term to mean "fair market value," which is the amount a buyer would pay a seller if neither were under undue time constraints. Most courts, however, have upheld the insurance industry's traditional definition: the cost to replace with new property of like kind and quality, less depreciation. Courts have varied in their rulings as to whether or not depreciation includes obsolescence (loss of usefulness as a result of outmoded design, construction, etc.)."

Answer 2

because insurance is a scam

I am sorry for your loss

Answer 3

Read your policy closer, do you have "functional" replacement value?  If so, your policy only has to replace with "it works" and not with like kind & quality.  There is a difference.  That is the only thing I can think of that would allow the company to replace with a lesser value cabinet.

With regard to the hardwood floors, this is considered an upgrade from the carpeting.  If you want hardwood floors, tell the adjuster & have him adjust for carpets & give you the amount for carpets.  Do not put the carpets in, & get the hardwood floors.  Since this is an upgrade, you will have to pay the difference in cost.

Answer 4

They are giving you the less-grade cabinets because you can't prove that you had the top-of-the-line cabinets. If you can't prove it, they won't pay for it. Another reason is that when you originally put in the cabinets let's say 10 years ago, they were worth $20K. Today $20K wouldn't pay for those same cabinets AND they have aged, making them less in value.

The wood floors will be iffy. With our fire they wouldn't. If we wanted hardwood, we would have to install it AFTER they installed the carpet.

This is why it's ALWAYS important to keep copies of receipts and receipts somewhere that cannot be destroyed by a fire. We keep a video of our house (going through the house and detailing everything we own) AND scan the receipts to a CD that is kept at the bank.

Answer 5

First, you need to understand how replacement cost coverage works. With the company I work for(and pretty much ALL others), you don't automatically get a check for the replacement value of the damaged property. The company will give you the "actual cash value", meaning they'll take depreciation, of your cabinets and when you replace them within 60-90 days, they'll come back and cut you a check for the rest.

This coverage was originally designed to go along with total losses, until insurance companies saw how much in premium dollars it brought in. The theory behind taking the depreciation on the front end and reimbursing you the difference after you replace it is....if your house were to totally burn to the ground, you would probably have many items in the garage or attic that are pretty much worthless and are things you would never replace if they were gone(i.e. toys your grown children had when they were younger). If the company came in and paid you replacement value up front for all of this stuff you're not going to replace, the cost per claim would skyrocket.

Like others have said, the company will pay you to tear out and replace carpet. If you want hardwood floors, you'll have to pay the difference out of your own pocket.

Answer 6

First of all, as one human to another, I am sorry you have experienced your loss.  I am sure that its emotionally an awful thing to go through.

Insurance companies are a huge scam, they think nothing of canceling your policy after years of paying them if you are a few days late, they think nothing of fighting you every step of the way on paying your claim, they fight every step to keep you from getting what you have been paying for and have a right to.

The reason they get away with it is because they are HUGE business and the ONLY ones that know their business are attornies and insurance companies, and neither one is going to argue with them or their practices.