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Home / Insurance / Replacement value and actual cash value should be the same for a brand new item – but not if you are insured by GEICO | Real Estate Insurance Coverage Blog

Replacement value and actual cash value should be the same for a brand new item – but not if you are insured by GEICO | Real Estate Insurance Coverage Blog

A recent case involving the replacement cost value and the actual cash value was recently decided – incorrectly. 1 The case involved a car, and GEICO tore away its customer by successfully claiming that various items would not be included in actual cash value unless the car was actually replaced. Theoretically, the replacement cost and the actual cash value are exactly the same when an item is brand new. But not if you are insured by GEICO in Illinois.

To show the illogicality of the decision, GEICO's claims department makes incorrect claims, and why you should not be insured by GEICO if you do not want to be cheated, I give you the following hypothetical:

You want to buy your dream car. You have shopped in three different places and have bids that show "total cost" for buying the brand new car. These vary in car price, shipping, tax and permit tag. But all within $ 1

5 equals the same base amount of $ XXX.

You reach a deal that is conditional on 100% financing. You call your bank. They ask what is the total cost? You say $ XXX and they agree to finance 100% but you must have proof of car insurance. You call your agent and tell them about the bank's requirement to obtain an insurance policy. The agent looks up the car value and then asks what you paid for the car, you say $ XXX. The agent says they can insure the car and you pay the premium with your credit card.

You go out to the car and just before you put your keys in the door you hear a big buzz that buzzes and comes directly to you. You jump off and seriously injure yourself, but it hits your dream car and destroys it in a fireball of molten steel and rubber.

You're coming out of the hospital. You are shaken, have a large throw on one foot and the doctor says that you can not expect to drive for a year or two until your leg surgeries are over and you get your senses back. You can not drive yourself. You call your agent. He says "thank goodness you did not die. I might have to claim your life insurance. I read in the newspaper that you were not even allowed to drive the car. But thank goodness you called me and got car insurance on the car just before it You're completely insured. I'll call the insurance company's claims department and get it taken care of. & # 39;

The bank calls and says they're glad you survived. They say they read about the accident in the newspaper and that they received a message that the car was insured.You tell them that they are damaged, that no one can find or determine the drone owner and that you will stay away from driving anything for a long time.

The insurance companies' installers check everything and agrees that the car was never used and in new, embossed condition and that the purchased price of $ XXX was a reasonable price.

Ask to answer – what are RCV and ACV for the car paid for you and the bank? [19659003] 1. XXX [19659003] 2nd XXX minus VAT and permits

3. XXX minus VAT, permit, shipping

4. XXX read VAT, permits, shipping and prep

5. Nothing because you never intend to buy another car and therefore will not incur a cost.

6th Either 1-4 and you must get something more than xxx from the unknown and missing drone owner.

7th Not 1, and either 2-4, if you go to the federal court in Illinois. They are far to smart to determine that it is 5 or 6.

The correct answer taught to each property adjuster is xxx. It includes everything and that's what I wrote about, All acquisition costs should be included to replace cost values ​​. To determine the actual cash value, you must first consider the replacement value. Even for a car where market values ​​are taken into account, the replacement cost of a brand new coin car and the actual cash value will be the same.

Illinois Supreme Court faced a complaint involving the same concept. GEICO also met them. The prospect of big money payments means that insurance companies sometimes get their attorneys to try to argue for coverage benefits that are normally paid for, or at least considered when calculating the actual cash value.

How do we know that the Illinois Supreme Court blew this decision? Their answer to the question would be numbers 2, 3 and 4. Just an illogical result.

Please be with me at today for a Friday at 2 with Chip where we will go through the current events in claims on property insurance and follow up questions during the week. Here is the link.

Thought for the day

When dealing with humans, remember that you are not dealing with logical beings, but creations of emotions.
—Dale Carnegie
1 Sigler v. GEICO Casualty Co. No. 19-2272, 2020 WL 4251699 (7 ​​Cir. 24 July 2020).

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