'Full Replacement' insurance may not cover all losses - WRCBtv.com | Chattanooga News, Weather & Sports

'Full Replacement' insurance may not cover all losses

By Gordon Boyd
Eyewitness News Reporter

HIXSON, HAMILTON COUNTY (WRCB) - Pictures the night of, barely hint at the damage the Hixson tornado wrought inside Jim and Lisa Stanley's home on Queen Aire Lane.

"When the water came in and under the hardwoods, it was like a sponge, " Lisa Stanley says.

Two weeks later, much is repaired.

"But restoring means rebuilding to code," she says. "There've been upgrades, and permits--building permits that require the upgrades."

Code requires 2 x 8s for the rafters. The Stanleys home was built with 2 x 6's.

"You want to make sure it (your home) is insured for replacement cost even though its more than you can sell your house for," says insurance agent Phil Smartt.

In most cases, Smartt says, 'full replacement' coverage buys you 25 to 50 percent more protection than the appraised value of your home and property, while adding about 15 percent to the cost of your premium.

Example: a home appraised for $210,000 could net $265,000 toward replacement costs, and $185,000 to replace a home's furnishings and contents, for about $738 a year.

 But that still might be not enough to pay for code upgrades.

"Apparently, there's a rider that insurance companies offer that I didn't know about," Stanley says.

"Make sure when you're talking to your agent that you ask them that very question," Smartt says.

"Asking" is key. Tennessee law doesn't require you buy full replacement coverage, nor are insurance agents required to explain its limits.

However, you can compare companies, and coverage's on-line, thanks to ambest.com

"They will look at the financial status of that company, how much money they have reserved, for paying claims," Smartt says, "Some may be below an A rating. I'd be leery of that."

Ironically, the Stanleys first remodeling was almost finished when the tornado hit.

"It's still my dream home," Stanley says. I plan to stay here until somebody drags me out in a box."


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