Case Study: How We Turned a $277K Insurance Offer Into $350K
And Found $25K in Hidden Coverage Along the Way
When disaster strikes, insurance is meant to be your safety net. But what happens when that net has holes? That’s exactly what one property owner discovered - until ALPHA Adjusting stepped in to help.
The Situation:
A fire damaged a 2,500 sq ft building containing a bar and nightclub. The owner had insurance coverage that was capped at $325,000, but rebuilding the full structure would cost closer to $580,000. On top of that, their policy included a 100% coinsurance clause—an often-misunderstood provision that punishes policyholders who don’t carry enough insurance.
The result? The first settlement offer from their insurance was only $277,000. A tough blow for the property owner!
What Is Coinsurance, and Why Does it Matter?
Coinsurance is one of those insurance terms that sounds harmless - until it directly impacts your claim.
Here’s how it works:
If your policy includes a 100% coinsurance clause, you’re expected to insure the building for its full replacement cost. If you do not meet this requirement, the insurance company can reduce the amount they will pay for the loss.
Here’s a simplified example:
You have a building that would cost $1,000,000 to rebuild, but you only insure it for $800,000 (80% of the replacement value).
If your policy has a 100% coinsurance clause, your recovery rate is 80% to match the percentage you were insured for.
That means if you suffer a $200,000 loss, you will only receive $160,000 (80% of the loss) and you will be responsible for the rest of the replacement and repair costs.
That is exactly what happened to our client. Their loss, valued at $504,000, was reduced to just $277,000 - all due to coinsurance calculations.
What We Did, and How We Fought Back!
This is how the ALPHA Adjusting team intervened and made a big difference:
We challenged their math. We pointed out that the insurance company was using the full replacement value in their calculations, even though the loss was not a total loss AND the policy allowed for Actual Cash Value claims.
We recalculated using the policy’s fine print. Because the policy allowed for the claim to be filed based on Actual Cash Value (ACV), which factors in depreciation -- That gave us the leverage to adjust the numbers in the client’s favor. We were able to show that the payout should be closer to the policy limit of $325,000.
We found hidden money. While reviewing the full policy, not just the front summary page, we discovered an additional $25,000 in debris removal coverage. It wasn’t clearly stated, but it was there. And it mattered.
The Final Outcome
Initial Offer: $277,000
Final Settlement: $350,000
o $325,000 for the building
o $25,000 for debris removal
Extra Recovered: $73,000
Why This Matters to You
For a property owner, that additional $73,000 is more than just a financial win. It’s vital capital that supports timely recovery to resume their business operations. Securing the full value of an insurance claim is essential, not only for rebuilding, but also for preserving business continuity, protecting tenant relationships, and maintaining long-term property value.
If you own multi-unit or commercial properties, you likely haven’t read every page of your insurance policies. And even if you have, terms like coinsurance, ACV, RCV, and withheld depreciation can seem can be overwhelming!
Here’s what you need to know:
Avoid coinsurance when possible. Policies with agreed value are typically safer.
Make sure your coverage reflects current rebuilding costs, not just the purchase price.
The declarations page doesn’t tell the whole story. Important coverages are often buried deep in the policy.
The ALPHA Difference
This case highlights the value of having an expert in your corner – someone who understands how insurance really works. From Day One, we were on-site, negotiating face-to-face, and combing through every line of the policy. We didn’t just settle - we strategized, challenged, and delivered. Our advocacy resulted in an additional $73,000 in settlement for our client, and that money was crucial to their recovery.
When your property is on the line, you need more than a claim number.
You need a team that fights for every dollar you’re owed.
