Full Replacement Value Homeowner’s Insurance

Craigslist Value vs. Full Replacement Value

I went to college in Colorado Springs, about 115 miles south of my parent’s home in Longmont. I had a road bike that I road often 100s of miles a week, and it was my most-cherished possession. When some heartless meanie stole it, I was crushed…until I learned the benefits of carrying full replacement value coverage on your homeowner’s insurance.

My buddy, “Bike Mike,” helped me buy my road bike a few years prior at a bike swap in Denver. He convinced me that $400 for that specific, old, somewhat ugly bike was an incredible deal. I trusted him not only because he was a friend: Bike Mike was also on the Olympic road cycling team.

Of course, Bike Mike was right. That bike was lightening fast and every time I took it in for service at the local bike shop one of the mechanics would offer to purchase it.

When it was stolen I learned not only to buy heavier bike locks, I learned that full replacement value means your insurance will cut you a check for replacing an equivalent quality item at today’s cost…even if that is more (much more) than what you paid.

My dad called his homeowner’s insurance agent after I called him sobbing about my loss. She confirmed that his policy covered his in-state dependents, even at a distance. She called me that afternoon asking for any proof of ownership I could find so she could write me a check.

I bought it used: I had no receipt, not even a photo of me with the bike. The only thing I could think of was that the bike shop would be able to speak to my ownership since I knew the mechanics coveted it for themselves.

I didn’t dare hope that I’d get $400, given the distance and paltry documentation. I also harbored no illusion I could find another incredible bike for just $400.

I’ll never forget what she said when she called me back the next week. “Libby, are you sitting down? The bike shop remembers you and your bike, and estimated the cost of replacing it with today’s top-of-the-line racing bike. I now understand why you’re so sad. The good news is that your parents have incredible insurance, so if you can provide me with your address I can send you a check for $2,650, plus tax.”

WHOA!

I’d presumed insurance helped you replace what you spent, at best. I figured I would be lucky to get an estimate of what I could sell it for on Craigslist.

That’s not the case with full replacement value. Full replacement value homeowner’s insurance replaces the value of the lost item if you purchased it new today. It’s like the opposite of depreciation.

Documenting What You Own: Lessons from the Marshall Fire

I got really lucky with my bike: the agent didn’t need to be so generous. She didn’t need to believe a third party about my bike ownership or what it was worth.

I suspect she was so generous because a few thousand dollars is no biggie for an insurance company – they often deal with catastrophic loss. They kept a good customer delighted (my parents), and taught me, a then-future homeowner, the value of having great insurance.

When there’s a catastrophic loss, like the 2021 Marshall Fire, calling the local bike shop isn’t going to help. I’ll cover how I have since documented the contents of my home for insurance purchases in another post, but in the meantime, here’s a good overview of options to document your belongings.

If you’d like some recommendations for local insurance agents, please get in touch with me. I’m happy to share a few of my favorites who can help you think through if full replacement value homeowner’s insurance is a good fit for you.

NOTE: Everything beyond lacks educational value. Only read on if you want to share in my multi-decade delightful drama resulting from my initial loss. : )

How $400 + Insurance = 3 Bikes and Less Debt

You might be wondering what I did with an almost $3,000 insurance check. First, I bought a new-to-me used bike. Second, I paid down some of my student debt.

To replace my bike, I bought a steel-framed cyclocross bike, an Ibis Hakkalugi. The color? Gang Green. She was really rad.

Back then, the bikes were handmade in a small, Northern California workshop that had a cult following among bike nerds. It was exactly my size and what I needed for road tours. I was thrilled with the exchange. The bike mechanic who sold it to me over Ebay, Aaron (in Chicago), clearly cherished it.

Hakkalugi and I enjoyed a fantastic partnership for nearly two decades. I never counted, but I’m certain we moved through thousands of miles together over the years.

And then…I became a mom. Bikes fell off my radar. Hakkalugi spent undue amounts of time garaged.

17 years after I bought my Hakkalugi, Aaron from Chicago found me on the internet. He asked if he could buy his bike back.

I was charmed that he still loved her so much, and felt badly she’d seen so little riding since I became a mom. I agreed under one condition: I didn’t want money, I wanted another bike. He built one per my specifications, and personally delivered it to Longmont in spring 2018.

The photo below is me and Aaron, my new Surly, and my old Ibis.

Hakkalugi is now permanently out to pasture in an informal bike museum near Chicago. She no longer take riders anywhere, but she’s admired by bike nerds throughout the Midwest.