Updating a home insurance policy is one of those chores that many people secretly hope the insurance elves will handle.An estimated 22% of homeowners do not update there policies because they are afraid their premiums will increase.Another 55% did not know they needed to, or they didn’t have time. When was the last time you update your homeowner policy? Is your home fully insured? Click here to determine if you are, like most homeowners, underinsured.
It’s important to distinguish the difference in terms that are often used when talking about homeowners insurance.
Assessed Value:The value of your house to determine the amount of property taxes you pay.
Market Value:The amount someone would be willing to pay you for your house should you want to sell.
Replacement Cost:The amount of money it would cost to replace your house at today’s prices.
Which one of these terms describes how your homeowner policy will pay for a partial or total loss to your house?If you said replacement cost you would be correct.The other two terms have NOTHING to do with your homeowner policy. Replacement cost is the only term we need to understand.Once you determine your homes replacement cost you will know how much to insure your house for.
Let’s talk about Replacement Cost.Why is replacement cost so much higher than the market value of my house?Consider the following costs associated with a loss to your home: clean up of damages, debris removal, protection of undamaged portions, inflation of component parts of your house such as PVC, lumber, copper pipes, shingles, drywall and the big one labor.These are just some samples of what make up the replacement cost of your home.Your next question may be how do I determine my homes replacement cost?There are several ways to complete this task. Our agency has access to the ”Marshall& Swift /Boeckh’s Residential Component Technology” software that will estimate your home replacement cost. A local contractor my offer you some assistance.There are also internet sites that can do the estimate for you for a small fee.This is a very important part of your homeowner policy. If you have not done this computation please do it or ask for our help. For more information on Replacement Cost, click here.
In a recent survey of 3 million homeowners there is a 61% chance that your home is underinsured by an average of 25%.
We can help before you have a loss.We can’t help you after you have a loss.
Before you get new stuff, get a better handle on the stuff you already own. MyThings is a global online registry to help you organize and manage your belongings. You create a list of items on your MyThings Portfolio, then the site will give you free valuation and market estimator services, help you find warranties and owners manuals, and even simplify the process of selling, recycling, or donating items you no longer want. Click here to try it.
