You have probably seen dozens if not hundreds of commercials for home insurance. Many of them tout the faster and cheaper offerings that you can purchase for your home. And there definitely are faster and cheaper options out there. But is that what’s best for your coverage needs? Let’s take a look at what usually isn’t an apples-to-apples comparison.
Deductible
As you probably know, your deductible is the amount you’ll be responsible for if you have a claim paid by your insurance company. Cheaper policies often have higher deductibles, meaning a claim resulting in $10,000 of damages might cost you $5,000 out of pocket on a cheaper policy, while a “more expensive” policy may only result in $1,000 out of pocket. It may take a significant amount of time to “save” enough money on lower premiums to make up the difference.
Replacement Cost and Actual Cash Value
Most home insurance policies pay claims based on the insured value of the property. How much they pay is typically based on either the replacement cost of the damaged property or the actual cash value (ACV). For example, if you have a 20-year-old roof that is damaged and must be replaced, a policy that pays ACV will pay out what the value of the roof is after it’s current depreciation. A policy that pays replacement cost will pay out the amount to replace the roof with similar materials to match its original value.
Personal Property Limits
The amount of coverage for what’s inside your home can be just as important as the outside. Some policies only provide coverage for up to 50% of your property’s insured value. Others may offer 70% or higher for this coverage and may offer more specialized options for items like jewelry, collectibles, and other valuable items.
Liability Limits
In addition to physical property, your home insurance usually has coverage for your personal liability. This means that lawsuits brought against you or damages you cause to others’ property may be covered. But for how much? Some policies may only offer $100,000 of this coverage, while others may cover $500,000 or more. These higher limits will typically coincide with higher premium policies.
Our agents can review the homeowners policy options you have available and the differences in their coverage. Give us a call and let’s discuss it!