Three Myths About Contents Restoration

After a fire or water loss, common misconceptions homeowners and carriers often have is that damaged contents cannot be restored so they should be automatically replaced, or even cashed out. These, as well as other myths related to contents restoration, lead to higher claim costs, customer service issues and customer retention issues.

Here are three misconceptions, or myths, to avoid this customer service minefield.

Myth #1: Homeowners would rather buy new contents than restore “old” contents.

While homeowners are happy to shop and add new items to what they already own, they don’t necessarily want to replace everything because that takes a lot of time and effort. Imagine the task of replacing all of the furniture, clothing, dishes, decorations; literally every item in your home. Just thinking about it is exhausting. In fact, studies show that customer service plummets when homeowners are inconvenienced.

Soft contents tend to hold more sentimental value than any other content category because they are often seasonal, purchased for a special occasion, gifted or hold a special meaning. A homeowner may have an outfit worn to a daughter’s wedding or other memorable event, a flag symbolizing military service, or a quilt that grandma hand-stitched. These sentimental items are often irreplaceable.

Myth #2: Even if there is no attempt to restore an item, it can still be replaced.

That’s simply not true. A homeowner can’t replace an item because, in their opinion, it can’t be restored; restoration must be attempted first. The only exceptions are contents that are structurally damaged or a restoration expert evaluates and designates items as non-salvage at the loss site.

Most homeowners and some carriers don’t realize that, for the vast majority of restoration companies out there, if there is an attempt to clean an item and it is not fully restored, there’s no charge for the attempted cleaning. There’s virtually nothing to lose by attempting restoration.

Yet, there is a lot to gain! When items are restored, the cost of restoration is always a better option than replacement. That’s because restoration costs, on average, are only 15 to 25 percent of an item’s value.

Cost savings aren’t the only benefit of restoration. For a variety of reasons, many people are underinsured when it comes to contents coverage. They may have had their policy for years and haven’t increased the limits as they accumulated new things. They may have opted for less coverage in exchange for lower monthly policy payments. After a loss, this leads to policy limitation issues; so, their money goes a lot further when items can be restored versus replaced.

Myth #3: Cashing out a contents claim is a good idea.

Rather than wait for items to be restored, a homeowner may accept an offer from a carrier to “cash out” a claim. We already know that replacing items costs more than restoring items; so, by doing the math, we know that a “cash out” will not enable a homeowner to replace all their items, but does the homeowner realize that, or are they tempted by a quick payout? The carrier, too, may see the option as a way to quickly close a claim and move on to the next one.

The policyholder can replace what they use on a regular basis, but, because a homeowner rarely considers seasonal items, bedding, drapery, rugs, shoes, hats, holiday decorations and dishes, etc., they inevitably become frustrated when the amount received isn’t enough to replace all their damaged items.

The end result, either with an underinsured policyholder, or one that accepted a “cash out” settlement that quickly ran out, is “buyer’s remorse.” Rather than blame themselves for not purchasing adequate insurance coverage, or for taking the “quick and easy” payout, they usually blame their agent and carrier.

Avoiding this myth minefield by anticipating the consequences of cashing out or replacing lost contents versus less costly restoration, is the key to better customer service and reduced claim costs when dealing with contents after a loss.