The cost to rebuild your home is its replacement value. This can be very different from the estimated market value or actual purchase price. In most cases, it costs more to rebuild the home you own than to buy a new one. This is an important insight into why your Dwelling (Coverage A) limit is so important.
Deciding How Much Home Insurance is Enough
PLC’s home insurance agents will work with you to estimate the replacement cost for your home and to adjust your home insurance policy limits from time to time as needed.
It is critical that you provide us with accurate, updated information about your home and contents. If your policy limit accurately reflects your home's true replacement cost, some home insurance companies will pay more than the limit if a covered loss is greater than the limit on your policy. Ask us about Extended Dwelling Coverage for an added layer of protection.
Once a review of your home and possessions indicates you are properly insured, it's a good idea to reexamine your home insurance policy coverages and limits from time to time, especially whenever you make additions or improvements to your home.
Do I Have Enough Home Insurance?
Here are some steps you can take to reduce the danger of being seriously underinsured:
- Call us - If you have questions or concerns about the limits in your home insurance policy, call us. This will also give you an opportunity to make us aware of any overlooked information.
- Read your home insurance policy - Certain property, such as jewelry, and certain perils, such as earthquake or flood, are better insured separately or are excluded from home insurance policies. Knowing what is covered and for how much will help you insure properly.
- Tell us about home remodeling projects - At each annual renewal of your home insurance policy, you receive a new Policy Declarations page showing limits of coverage and optional coverages. Review this information. If you do any significant remodeling to your home, purchase larger electronics/appliances or cars, or sell cars or larger items, tell us about these changes so we can get you an updated home insurance quote.
- Consider whether your home insurance policy provides all the protection you need - Does it provide coverage for extra costs resulting from building code changes? Does it automatically increase coverage limits annually to keep pace with inflation? Does it provide additional funds if the cost of rebuilding your home exceeds the home insurance policy limits?
- Find out whether your home insurance company will stand behind agreed upon repairs after a claim - Some companies are willing to put this guarantee in writing.
- Find out if your home insurance policy includes replacement cost coverage for contents - "Contents" includes clothing, furniture, appliances, and other personal property inside your home. If not, you can add it by endorsement. The cost is small, but the protection valuable. Replacement Cost Coverage pays for losses to your possessions at the cost of brand new items. Without this option, a covered loss to your personal possessions would be depreciated by their age and condition, reducing the size of your claim settlement.
- Ask us about supplemental home insurance - If you have an art collection, antique furniture, jewelry, or other valuable possessions, talk to us about supplemental coverages, such as fine arts or scheduled property endorsements to adequately protect your investment in these items. The cost is modest for the extra protection, and often the deductible is waived.
- Consider whether you should have more coverage for personal property (contents) than your home insurance quote provides. Personal property coverage is usually 70% of the coverage limit for the structure. Your limit may be lower than 70%. Supplemental protection is available for a small additional premium.
- Prepare an inventory of personal property items, update it periodically, and keep it in a safe place outside your home, such as a bank safe deposit box. It will save you hours of time trying to list everything damaged or destroyed if you need to make a claim. Let our home insurance agents help you simplify the job with tips, such as videotaping each room with descriptive information on the sound track.
Personal Umbrella Insurance Offers Extra Protection
Besides making sure you have enough home insurance protection to cover damage to your home and contents, you should also evaluate your exposure to liability risks.
These result from damage to the property of another, or injury to a person (not a household member), for which you can be held responsible. In recent years it's become common for homeowners to be sued for injuries or damages to others, even when there is no evidence of negligence by the homeowner.
If you have assets, you risk being sued. Even if you ultimately prevail in court, legal fees and months or years of worry and uncertainty can be a terrible burden on you and your family.
The Personal Liability coverage provided by your homeowners insurance policy usually provides a limit of $100,000 or $300,000. We recommend increasing this protection with personal umbrella insurance. Not only will it increase your personal liability, but also your auto liability. Limits are available from $1 million to $10 million and beyond. The cost of this coverage is usually very reasonable.
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