What Happens When Property Damage Exceeds Insurance Coverage?

property damage exceeds insurance coverage

It’s no surprise that property damage is costly, but that fact hits home even more when total losses exceed insurance coverage. Dealing with these realities can become frustrating, especially when you’re balancing aesthetics, function and safety with financial considerations. As a provider of property damage repair in Michigan, EJH Construction is dedicated to serving your unique needs. Navigating the world of insurance is just part of our commitment to our clients. In addition to insurance restoration some of the emergency restoration services we offer include water damage restoration and fire damage restoration. EJH is also an expert mold removal company and can handle all of your mold remediation needs.

Considerations for Homeowners

Homeowner insurance policies come in all shapes and sizes. Most reimburse for claims on physical structures and their contents that are destroyed or defaced by storms, fire, vandalism, theft and some natural disasters. Dwelling coverage is the component that usually pays for home restoration services. Typically, it does not include losses from earthquakes or flooding unless it’s written into the individual policy or the owner purchases separate coverage. Also, some exclude or limit reimbursements for mold or sewer backup claims.

Most dwelling coverage is based on replacement cost valuation, meaning that structures are repaired or replaced regardless of any depreciation. Any construction will be of similar quality to the original materials. However, homeowners tend to purchase amounts based on either their mortgage amounts or their current home values.

Because of these tendencies, it’s estimated that more than two-thirds of homeowners have underinsured their residences. That means their policies may not pay out enough to fully cover restoration work. For repair and restoration expenses that exceed a policy’s upper limits, the homeowner will need to pay the difference out of pocket. A professional cost estimator from a home replacement specialist, realtor or contractor can give you a better estimate of potential restoration costs.

Insurance Restoration: Damage to Commercial Properties

Commercial property insurance works on somewhat similar principles as homeowner’s coverage. Even so, it must reimburse for and protect against losses from a wide range of claim types. Besides physical structures, it must also include landscaping, equipment, documents, signage and inventory. Coverage is generally based on the value of the business’s assets. Some policies also include loss of use or access under their definitions of property damage.

Most businesses’ policy limits are set high enough to pay for repairs and restoration due to covered losses. Keep in mind that some exceptions to this may exist. For instance, additional coverages such as Debris Removal or Pollutant Cleanup could have sub-limits that fall below the total policy limit. Building and Personal Property coverages can also include extensions for Newly Acquired Buildings, but sub-limits could apply to these extensions.

Understanding your business’s indemnity protection is key. Depending on how it’s written, it could have different limits for buildings and BPP, a single blanket limit or sub-limits for individual extensions and additional coverages. Once any claims exceed these limits, your firm will likely need to pay additional costs from its own funds.

Choose an Expert Restoration Company

Selecting the right contractor is key for both residential and commercial restorations. Although insurance companies may suggest you choose from their preferred vendor lists, you are not obliged under Michigan law to choose a company from those lists. The bottom line? It’s in your best interest to hire a licensed qualified contractor with significant industry expertise and credentials from the Institute of Inspection, Cleaning and Restoration Certification.

EJH Construction is a full-service general contractor with over 40 years of experience in disaster mitigation, damage restoration and commercial renovation. With an A+ rating from the Better Business Bureau and certifications from leading industry organizations, EJH is one of the top-rated restoration companies in Michigan. To learn more about your options or get a new project started, contact us through our convenient online form or call our offices at (888) 339-7335.