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GeoVera is implementing changes to our overall residential earthquake insurance program that may impact individual policies. We will be incorporating improved home replacement cost calculation methodology which is used to determine individual policy’s coverage limits.
Individual policy’s coverage limits may change with the implementation of the improved home replacement cost calculation methodology.
Frequently Asked Questions:
- Why is GeoVera implementing these changes?
- How is the replacement cost of my home calculated?
- Who is Marshall & Swift/Boeckh (MSB)?
- What is Residential Component Technology (RCT)?
- What does reconstruction cost include?
- How does GeoVera know how to calculate the replacement cost of my home and all of its unique features?
- What if I did not complete the survey? How did GeoVera calculate the replacement cost of my home?
- Why does GeoVera adjust the replacement cost value each year?
- Why is trying to calculate the most accurate replacement cost so important?
- How is the single coverage limit of my GeoVera Comprehensive earthquake policy determined?
- How do I know GeoVera will be able to pay my claim in the event of an earthquake?
- Why is GeoVera implementing these changes?
We are implementing an improved methodology to determine replacement costs for the homes we insure. Calculating replacement costs that are as accurate as possible increase the chances of having enough insurance coverage to reconstruct your home after a catastrophic loss.
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- How is the replacement cost of my home calculated?
GeoVera is using the Residential Component Technology (RCT) replacement cost calculation tool from Marshall & Swift/Boeckh (MSB) to determine replacement cost values.
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- Who is Marshall & Swift/Boeckh (MSB)?
Marshall & Swfit/Boeckh (MSB) is recognized in the real estate and insurance industries for their significant research and efficient, reliable technology and services. Eighty percent of the top rated Property and Casualty insurers use MSB data and tools to make risk management decisions. MSB has built the most validated localized building cost database in the industry. Visit MSB online at: www.marshallswift.com
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- What is Residential Component Technology (RCT)?
RCT is a data driven solution developed by MSB and used by GeoVera to calculate replacement cost values. RCT is built on MSB's "total-component" methodology, which calculates risk-specific reconstruction costs for each home using readily identifiable interior and exterior home characteristics. The emphasis on reconstruction is important because the cost for reconstructing a house after a total loss is far different than constructing the same house as new construction.
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- What does reconstruction cost include?
Some factors included in reconstruction cost are:
- Extra costs to tear out damaged materials or demolition and debris removal
- Compliance with changing building codes
- Availability of skilled labor; fewer contractors specialize in reconstruction than new construction
- Special features and materials often associated with older homes become more costly or are not readily available
- General Conditions (permits, fees, architect fees, etc.) and General Contractor overhead and profit
- Loss of buying power/reduced economies of scale
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- How does GeoVera know how to calculate the replacement cost of my home and all of its unique features?
In 2010, we began mailing surveys to all of GeoVera's residential earthquake customers in Oregon and Washington. The survey was designed to capture both exterior and interior construction features of the home, including items such as floor coverings, wall coverings, kitchen appliances and bathroom features.
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- What if I did not complete the survey? How did GeoVera calculate the replacement cost of my home?
If you have not completed the survey, we will review the information currently available on your policy and use that data, along with consistent rules to resolve conflicts in data as needed. We apply consistent rules as necessary. In addition, for some of the main construction features that we do not have (e.g., siding, flooring), we will use data obtained from various public sources (public record and appraisal data) and RCT. RCT provides information for main construction materials and finishes by the location, size and age of the residence. They provide a reasonable and likely set of building characteristic data within a given state based on what is statistically most commonly found most of the time based on home age, size and location. This is not to say that every home will have these characteristics since all homes are different. For example, property characteristics such as garage type and size are important in determining the value of your home and is not included in regional property characteristics that we can obtain from RCT. By completing the MSB survey we can obtain more accurate information on the actual features and characteristics of the homes we insure. At renewal, a document will be sent to you that identifies the property characteristics we used. Please promptly review this document and submit any revisions as soon as possible.
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- Why does GeoVera adjust the replacement cost value each year?
GeoVera makes an annual adjustment to the replacement cost value to keep pace with changes in the reconstruction costs throughout the state.
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- Why is trying to calculate the most accurate replacement cost so important?
Calculating replacement costs that are as accurate as possible increase the chances of having enough insurance coverage to reconstruct your home after a catastrophic loss. Other large catastrophic events such as earthquakes and wildfires have shown that many homeowners did not have proper coverage limits and therefore did not have enough insurance coverage to rebuild their home.
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- How is the single coverage limit of my GeoVera Comprehensive earthquake policy determined?
The single coverage limit on the GeoVera Comprehensive earthquake policy compares to the total of all limits (Dwelling, Contents and Additional Living Expenses) on a typical homeowners policy plus demand surge. The single coverage limit can be applied to the total loss and is not divided between coverages. Demand surge accounts for the fact that the price of materials, labor and services increase after a large catastrophic event, such as an earthquake.
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- How do I know GeoVera will be able to pay my claim in the event of an earthquake?
GeoVera Holdings, Inc., and its wholly owned subsidiaries which includes GeoVera Insurance Company, has been assigned a rating of "A-" Excellent by A.M. Best
Company. This rating was re-affirmed in June, 2010. The A.M. Best Company is a leading source of information on the financial condition and performance of insurance companies worldwide.
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