Homeowners insurance is something that most people that own a home need. A lot of us don’t even think about it, until we actually need it. Knowing your homeowners insurance policy can mean the difference between rebuilding your home or coming up short in the cost for materials. It’s always a great idea to do annual check ups to see if the cost to rebuild or repair your home has changed.
The standard homeowners insurance policies will cover you for fire, wind, hail, riots, and other covered perils. Disasters that are usually excluded from your standard policy are earthquakes and flooding. If you live in area where risks such as these are common, you’ll want to look into additional coverage such as earthquake and flood insurance.
A typical homeowners insurance policy will also cover you for legal liability, & additional living expenses. Legal liability will cover you if someone is hurt injured or decides to sue you for injuries. Additional living expenses coverage will cover the cost of eating out and hotel stays if you are forced from your home.
There are 2 things homeowners insurance will cover in most standard policies;
The structure of the home;
There are 3 basic ways the structure of your home is covered;
Replacement cost; This insurance will pay the policyholder the cost of replacing the damaged property and this is without depreciation.
Extended replacement cost; This is an extended replacement cost homeowners insurance policy. It will cover the costs up to a certain amount over the limit. It will give you protection against things such as increases in construction costs.
Actual cash value; This homeowners insurance policy will cover the cost to replace the home minus depreciation for age and use.
Tip when insuring your home;
Always make sure to get the amount of insurance that will cover the cost to rebuild your home. Take building materials into consideration and additional features of the home. The market value and the cost to rebuild the home are two different things.
Take a quick estimate of the amount that is required to rebuild the home. Multiply the local building costs per square foot by the square footage of the home. Consult a local home builder to find building rates in your local area. It’s also helpful to check with a local agent for advice on what may be best.
What factors will help determine the cost to rebuild the home? Construction costs, square footage of the home, exterior wall construction, masonry, the style of home, number of rooms and bathrooms, what type of roof, garages, fireplaces, exterior trim, and more.
Every year check the cost to build the home, taking in consideration local building costs; It’s a good idea to check with your local homeowners insurance agent to see if you can take advantage of an inflation guard clause. This can adjust the dwelling limit when you renew your policy to reflect the current construction costs in the area.
You shouldn’t insure the home for the current market value; Costs to rebuild the home could be higher or lower than the price you actually paid when you bought it.
Personal belongings
The main 2 ways your personal belongings will be covered;
Replacement cost; Your homeowners insurance policy will pay dollar for dollar the amount needed to replace damaged personal property without deduction for depreciation.
Actual cash value; Homeowners insurance under which the policyholder will receive an amount equal to the replacement cost of the damaged property minus depreciation. This is unless a homeowners insurance policy specifies that the property is covered for the replacement value.
Things to keep in mind when insuring your personal belongings;
Always check the limits of your policy for personal items; Items such as jewelry, silverware, fur coats, computer equipment and valuables. If the limits of your homeowners insurance policy are too low, please consider buying additional coverage to cover the difference.
Make an inventory; You may want to go through your home and make a checklist of the contents. Take note of all major items you own. It’s also a good idea to take down all serial numbers, makes / models, purchase price, value etc.
Document the inventory you made; It’s always a good idea to take photos or video of your personal property. Making sure images of the receipts is always helpful as well. These images should be kept safe away from the home.
Getting the right coverage is important. The easiest way to make sure you’re getting great coverage that will cover you if the worst were to happen, is to speak to a professional homeowners insurance agent. The agents at Eugene C Yates Insurance Agency are up to date on all the potential discounts as well as other ways to save you money on great coverage!
Give us a call today for a free homeowners insurance quote at 916 313 6100