YOU ASK:

Can the insurance company replace an item instead of paying for it?

WE ANSWER:

It depends on what the policy says, but usually, the insurance company will pay in cash. If you want a deal that provides you with replacement of a damaged appliance, then it is a home warranty you need and not a homeowners insurance policy.

After all, an insurance company will also have to consider your deductible, so they can't just go and replace an item. Also, it may even be complicated on the part of the insurance company to go and shop around for a replacement unit or if that is not available, then one that is similar. It is simpler to just determine how much they need to pay you and just send you the check.

There are some insurance companies that may send a repairman over to check the condition of your appliances, such as a cause of an electrical power surge that damaged your appliances. They may try to repair the appliances for you and whatever appliances cannot be repaired, these they will pay for, depending on the type of policy you have.

There are also other insurance companies that will allow you to go to your repairman and just send them the bill.

As for "replacement", it really depends on the type of policy you have.

  • If you have a "replacement cost" policy, the insurance company will determine how much it will cost to buy a similar unit - that is, how much you will need to buy the same model and brand or something of comparable quality and material.
  • If you have a "current value" or "actual cash value" policy, the insurance company will appraise your items and see how much they are currently worth, putting into consideration resale or salvage value as well as depreciation or normal wear and tear.
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