Yesterday I got my insurance settlement for the burglary. Well, I got most of it. USAA holds back what they call the “recoverable depreciation amount” which is basically the difference between what it would cost for me to replace something I’ve lost with a used item, and the total cost to replace it with a new product. I can get the recoverable appreciation amount, but I have to submit receipts proving I actually purchased the replacement item. For example: the computer that I’m typing on right now is a brand new MacBook, which replaces the four-year-old G4 iBook I lost in the burglary (there’s really no comparison between the two laptops — the new one is three times as fast, has an Intel chip and the hard drive is a dozen times larger). The MacBook costs $1499. USAA gave me an initial settlement of $899, and to get the other $600, I had to turn in a receipt. Granted, this is a hassle. But it’s a hassle that enables me to replace the things I lost with all new stuff.
And if I don’t want to go out and replace the stuff, I still get cash that is more or less equivalent to the used value of the items lost.
I have no idea if other insurers have this “recoverable depreciation” program, but if they don’t, I’d be very suspicious about how their claims process works. I comprehend the cold hard facts of the bottom line enough to get why insurance companies need to “adjust” (read: minimize) their claim payouts. But this means that the claims process has a built-in adversarial quality to it: claimants, who if they’re honest persons are only making the claim because they’ve been traumatized in some form or fashion, are naturally looking for as generous a payout as possible, to make up not only for the material loss but for all the emotional cost that went along with it. Meanwhile, the insurance company needs to keep the payout as small as possible, just to protect their bottom line (after all, nobody wins if the insurance company goes bust from overly generous payouts). It’s not a fun dynamic, especially for the claimant, who goes into the process feeling vulnerable and already victimized.
So even despite the send-in-the-receipts hassle factor, the recoverable depreciation approach strikes me as a fair and reasonable compromise. The insurer pays a minimal fair amount, but throws in enough extra cash to cover total replacement value, once the claimant goes about actually replacing the lost items.
So I’ve got this spiffy new laptop, and Fran has a wonderful Nikon D60 which replaces her stolen D40X. And since we lost another computer, another camera, an iPod and a sounddock, a camcorder, a minidisc recorder, and various smaller things, we’ll be keeping the golden arrow glowing pretty much all summer long (if you don’t know about the golden arrow, follow the link and watch the video. It’s quite an eye opener).
The takeaway, my friends: if you or your parents are military, that makes you eligible for USAA. If so, then it’s a no-brainer: buy your insurance through them.