What is Repair Over Replacement on a Home Insurance Claim?

If you read your home insurance policy, issued in the United States, you might find sections about how your insurance company pays for a covered loss.

Most insurers reserve the right to pay for repair over replacment, because in most cases it will cost less to repair than replace. This is an area of a policy that often gets feedback from the insured or their contractor. An insured will usually prefer an item be replaced as opposed to repaired.

Sometimes repairing something can cost almost as much as replacing it. If an insured can provide contractor quotes that specifically show a breakdown of material and labor costs for repair versus replacement, the adjuster may allow replacement of an item even though it could be repaired.

One of the most contentious items I have run across in adjusting is damaged exterior AC units. During a hail storm the condenser fins of an AC unit may get bruised by the hail and leave indentions on the fins. The fins are that large exterior aluminum panel that is layered or corrugated. They allow the intake and output of air, and good airflow is important to a system.

There is a procedure called combing the fins, which sometimes straightens out the hail bruised aluminum. Insurance will usually allow to comb these fins before any other type of repair or replacment is considered. A contractor may say the fins are too damaged to be combed, and that other parts of the AC unit are now damaged such as the condenser coil or condenser itself due to bad airflow. On older AC units it can be difficult to find condenser coils. However, when a contractor says they cannot be found, are out of date, or due to changes in types of refrigerants used the entire system needs to be replaced, the adjuster will likely research the unit. The adjuster can call the manufacturer of the AC unit or visit online suppliers of parts. Often the adjuster will inform the insured that parts have been found and this is the path the claim will take on the AC unit.

Other examples of damage that might at first appear to be replacement over repair:

An above ground swimming pool collapses. Upon inspection the outside adjuster finds no cracks or breaks in the aluminum or plastic framing, and the pool can be raised back up and a new liner installed. Insurance pays for the labor to repair the pool, and a new liner. Please note: if a pool framing has any damage such as irreparable creases that could later crack, an insured would make a strong case for replacement of the framing or pool since it could be a hazard once the pool is refilled with water. Insurance may also pay for the water refill if insured provides water bill.

A wood fence blew down. There are no cracked or broken boards. The fence can be raised back up. If covered, insurance would pay for the repair, and insured is likely better off because some policies deduct a non-recoverable charge for replacement of a run of fence, since the fence is considered a high-risk item for damage.

The aluminum garage door has two hail dents in it. The insurance will pay to have the dents removed and the door painted.

Following a power outage the clothes dryer no longer works. The adjuster will likely request a technical report and the insured’s technician finds that a small controller board burned out. Insurance will pay for the new controller board and the labor or service call.

Roofs are the most popular items insured prefer full replacement over partial repair. However, most outside adjusters are well trained in roof evaluations and to overturn an adjuster’s finding on a roof may require the insured’s contractor to make a case.

Insured should understand that policies may vary from state to state and insurance company. Policy rules are sometimes amended following a major event so check with your agent for any updated information. If you expect reimbursement, you should not take any major step in repairs or mitigation without first speaking with the adjuster assigned to your claim. While it may make sense to you that something is covered, coverage can usually only be determined by the adjuster.

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