home severely damaged by fire, must i repair or can i receive settlement

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Mar 28, 2012

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Insurance Question from Lockport, LA

Asked on 03/28/2012

home severely damaged by fire, must i repair or can i receive settlement home was for sale at time of fire,

Answer given on March 28, 2012

If your home is severely damaged in a fire the insurance company will pay the replacement cost of the home, up to the policy limit if you rebuild.If you choose to not rebuild, the insurance company will offer a depreciated value for the home damage. It will not arbitrarily give you the policy limit if you do not rebuild.The insurance company will determine the actual cash value of the home based on rebuilding costs and then depreciate based on the age of the home. The roof will be depreciated as will other portions of the home. You may be better served to rebuild or repair the home and then sell it rather than trying to cash out with the damages to the home. You may not be satisfied with the amount offered by the insurance company based on depreciated value. Talk to your agent or insurance company to help understand how the claim will be settled whether you rebuild or just try to cash out.

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