My sister and her family recently suffered a break-in. Among the items stolen were three laptops–my sister’s, and those of her two kids.
My sister reported the matter to the police, and to her insurer. As of yet, my sister has taken no steps to replace the laptops. According to her, the insurance company is going to put three new laptops, of the same make and model, in her hands. So, since the insurance company will deliver three laptops to her, she does not need to buy anything; now or ever.
My own thought is that the insurance company will pay her (via a cheque) the going rate for the three laptops, and there is nothing stopping her from going out and buying a computer (or three) now. She can certainly afford it; and the insurer will eventually send a cheque that she can use to pay off that purchase. But she insists that she can’t do anything right now–the insurer is going to give her three of the same laptops as were stolen.
I’m asking because I’m curious. I’m not going to get into a fight with my sister about this, but it did get me thinking about insurance policies.
I will add that my sister is insured by a reputable insurer–this is not a fly-by-night operation. I’m guessing that she’s misunderstanding the policy wording or the claims adjuster.
You can think of an immediate benefit to doing it this way - it reduces losses due to fraud. People who need cash rather than extra laptops won’t be as tempted to report their stuff stolen. (sure, they could sell the extra laptops if they were dishonest, but they would not get as much money that way)
It also probably improves customer satisfaction, as I understand it is logistically very complex how they source such a wide variety of consumer goods.
This post shouldn’t be in IMHO - it’s a factual question with a factual answer. I know the answer because I’ve seen advertising flyers from an insurance company bragging about how they can directly replace a huge number of items.
I agree with the above. The policy usually contains language that the company can, at its option, repair, replace or pay the value (in some cases replacement cost) of the covered item.
Huh. I’ve seen commercials like that recently, and assumed they were speaking metaphorically about how they pay full replacement value for your items, instead of the depreciated value on their worth.
For electronics, there’s the problem that older models depreciate almost instantly, and also that old stock is not easily available. Certainly you can’t just walk into a Best Buy and get the same laptop that you purchased there three years ago. So what exactly is the replacement value for an old but functioning laptop? The insured would have to scour the corners of the internet for the exact replacement, or find something approximately equivalent.
In those cases I can see why it would be easier for the insurer to go directly to a supplier of new old stock. Plus I bet they can get a standing discount, since who else is going to buy large volumes of new old computers?
Many insurance companies have fulfillment contracts with companies for various types of consumer goods.
When my house was robbed one of the items taken was a 1 year old top of the line VCR.
The insurance company gave me the choice of the current top of the line VCR from the same manufacturer or X amount in cash (less than what I could buy that unit for, probably what they were going to pay)
I took the unit a a week or two later UPS delivered.