Have you looked at your homeowners declaration page recently? Make sure you pay attention to your dwelling coverage amount. Oftentimes, unscrupulous agents or under trained individuals will apply a low value to your home to get the premium down. In this way, they gain your business, but potentially at your cost. You walk away thinking you got a good deal.
Remember to review your quote before accepting! When insuring your home, insurance agents should take into account the value of your land, and deduct that amount from the total value of your listed value. This allows a fair value of your home. We have had people call in for quotes that had insufficient coverage and sometimes too much. Let’s say that you call into an insurance agency for a home quote, and their quote is very low compared to what you are paying now. Sometimes people will increase your home coverage far above where it is necessary just to increase the premium. Your home needs to be insured to value. This is an important phrase in the insurance world, and you should know it.
Extended Replacement Cost and Guaranteed Replacement Cost
Even when your home is insured to value, you need to have extended coverage. Most insurance companies offer 125% extended replacement cost on your dwelling coverage. Make sure you at least have the extended coverage. Some home insurance companies let you do 150-200%. For example, if your home’s value is $200,000 on your home policy, and you have 125% extended coverage, then your maximum coverage is $250,000.
However, the trump replacement cost coverage is called guaranteed replacement cost. This means that in the event of a total covered loss to your home, the company will pay to replace your home as it was with no limit. It is the best you can get for your “Dwelling A” Coverage. Not every company offers this coverage.
Feel free to call or email us with any questions, and we’ll be glad to help. Take care and thank you for reading our blog this week. -John Hatcher