Whether you’re staying in your home or planning to buy a new one, the end of the year is a great time to look at your current homeowner’s insurance policy and decide if you should make changes. Here are some things you should know about homeowner’s insurance for your primary residence.
Replacement Cost vs. Actual Cash Value
Have you ever looked at your insurance policy and determined which type of coverage you have? Replacement cost will actually replace the cost of your lost goods from a robbery, fire or other covered loss, while cash value will only provide you with the estimated value of those goods. Although the difference in what you’d receive from a loss varies greatly, typically the cost of the insurance is nominal when spread across monthly payments. Many policyholders don’t look at what they currently have. When buying a new home, be sure to tell the insurance agent which type of coverage you want on your personal property.
Look at the Dwelling Coverage Costs
If you have or will have a mortgage on your home, the bank may set the coverage required to fund repairs to the property. Keep in mind if you buy a home for $250,000, you don’t need $250,000 in dwelling coverage because some of your purchase price was the land.
If you are self-financing or have paid off your mortgage, you may not have thought about this number recently. Some builders today say that the cost of lumber alone is up more than 10% in just the last year. Make sure that the dwelling coverage you have would be enough to rebuild your home in the event of a total loss.
Deductible
Ideally you will never need your insurance policy. If you do need to fall back on your insurance, you want be sure you have the right deductible. Different insurance companies have different options. Some allow you to choose a dollar amount. Others have a percentage of the claim. Keep in mind that the higher the deductible, the lower the payment. If you have the option of a set amount, $1,000–2,500 is fairly common.
Riders
Insurance riders are an addendum to the standard policy. There are different types. For example, the scheduled personal property rider includes valuable named items. Things like an engagement ring or other valuable jewelry items, coin or stamp collections, firearms, and valuable artwork may be included. Another type is a life insurance rider. This helps a surviving spouse pay the balance of the mortgage in the event of the death of one of the owners.
If you’re looking at buying a home, Jason Duraj and his experienced team at Future Home Realty are ready to help. We can connect you with trusted insurance agents for your new home if you request. Call us today for your confidential consultation with one of our professionals: (813) 992-7771.
