The other day there was a fire in my building (nothing big-didn’t effect my apt.). Then I discovered I had lost my CD case somewhere.
Thus I got to thinking. What would determain replacement cost on a CD.
For instance I own several copies of Juice Newton’s “Quiet Lies” CD.
Now I could easily go on eBay and sell them for $75-$150. But certainly if I had a fire or whatever in my apt my insurance company wouldn’t cover it.
My policy says “replacement cost.” Yes I know my insurance won’t replace the 22 CDs I had in my case and lost but the fire got me to thinking. To replace the CDs in the case is about $25 a CD most were imports. But say they had melted in the fire. Would the insurance company be most likely to say a used CD is worth $5 that is all you get.
Well, I would go by the dictionary and I would think replacement cost is what it costs to replace what you had. Fair market value would be what it was worth if you sold it. Amortized value would be what it cost you initially minus depreciation.
If they say replacement value it means they’ll replace it. My boat was hit by lightning and i am having all the electronics replaced. Because hat I had is no longer manufactured I am getting in fact stuff much better than what I had.
Many years ago I was riding my motorcycle and a woman driver ran a light and hit me. I was very lucky that I saw her coming and took evasive action and was not seriously hurt but my clothes were torn and my eyeglasses were broken.
Her insurance offered to pay for the value of the items (cost minus depreciation) and I said no way. You replace them. They tried to argue a bit. I said I didn’t care about their reasoning. I had eyeglasses before the accident and i want to have some now. I cannot go and buy some used ones. Eventually they agreed since their client was at fault and I could easily get her into more trouble and I wasn’t asking for that much anyway.
Replacement cost is just that: your insurance company will cut a check for you to cover whatever losses you incur, providing you properly document your losses through receipts, appraisals, photographic evidence, etc. That said, insurers have different track records when it comes to fairly compensating their clients. Some are stingy and difficult; others more reasonable.
I have acquired considerable possessions over the years–many rather pricey–and recently hired a company to come out and photograph/videotape the works. (I was rather uneasy about this proposition at first, but my insurance man spoke highly of them.) They documented everything down to the last detail, and incorporated every receipt and appraisal in their report, which is especially important re: expensive art and rare items whose values are not subject to considerable dispute.
Here’s a quick reality check: were your home to suffer damage from a tornado or major fire, do you think you could remember everything that you lost–and then prove it to your insurer? For many people, we are talking thousands of items large and small. Your forgetting even a small fraction could mean untold thousands of dollars lost. Insurance companies do not give their clients carte blanche when it comes to making insurance claims and people after major calamities. Most are going to want credible evidence and providing said evidence for thousands of lost items is a losing, time-consuming proposition. Otherwise, clients could claim all manner of fictitious losses and scam their insurance companies blind.
If you don’t own a camcorder, borrow a friend’s and document everything you have–then make a copy and store that copy with a friend or in a safe deposit box in another city, just in case of a catastrophic tornado. By the way, include photocopies of all receipts. Were someone so inclined, they could include video evidence of their friends’ possessions and then claim it as theirs should a fire/tornado occur. Bills of sale with your name on them are invaluable.
-The Squire