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Homeowners Insurance - Options and Products available

The are three very basic areas of homeowners insurance. The first is the actual structure of your home. The second involves insuring the contents of your home. The third insures against liability costs.

The Structure or Dwelling Coverage

There are three ways to insure the structure of your home; Replacement Cost, Extended Replacement Cost and Actual Cash Value.

Replacement Cost Coverage

Insurance that pays the policyholder the cost of replacing any property damaged without deducting depreciation, but limited to a maximum dollar amount.

Extended Replacement Cost

Similar to replacement Cost but with an additional amount to cover increases in production costs, etc.

Actual Cash Value

The amount the homeowner receives for the actual replacement value of the property minus a factor for depreciation. Unless a homeowners insurance policy specifically states Replacement Value, the coverage is Actual Cash Value.

The Contents

There are two ways to cover the contents of your home; Replacement Cost and Actual Cash Value. Recommendation: Replacement - always!

Replacement Cost Coverage

Insurance that pays for the replacement of your belongings with items of like kind or quality' without deduction for depreciation.

Actual Cash Value Insurance

Covers you for the replacement of your belongings minus depreciation. For
Example: Your TV might have cost $500 ten years ago. If you factor in age and depreciation, the actual cash value might only be $80 or $100. With replacement cost coverage you will be able to replace the item with something of like kind and quality. The intention of replacement cost insurance is to make you whole after a loss.

The Liability

This section covers you in the event someone gets hurt on your property. This type of coverage also can include if you are the cause of an accident even though it doesn't occur on your property. Things to remember/Options and Add-ons: Add-ons to your basic homeowners policy are often called 'endorsements' or 'floaters.'

There are several areas both within the structural part of your policy and the contents part of your policy that you will want to review before deciding to purchase the policy.

• Ask about any coverage limits on your personal items such as jewelry, computer equipment, photography equipment, silverware, furs, etc. There is usually a limit set per item and per occurrence. If your $5,000 ring was stolen, you would hate to find out that there was only $1,000 in coverage.
• Check to see if you should get an 'endorsement' for additional protection against rising construction costs (inflation rider).
• Insure you home for what it will cost to rebuild it. That may be more or less than the market value of your home. If you purchased a 3000 square foot home in the inner city, changes are you paid a lot less than what it would cost to rebuild that home from the ground up.
• Try to make an inventory of everything in your home. The inventory list should be kept somewhere safe and include serial numbers, make/model, purchase prices, date of purchase, and a separate folder for purchase receipts. When an insurance claim adjustor has information like this, it makes his or her job a lot easier and could help your claim proceed a little easier.
• It may be a good idea to take a video of your home and its contents to show proof of various belongings.
• DON'T forget to check if you need flood insurance. Flooding is not covered on most standard insurance policies. Your bank (if there is one) should inform you if flood hazard insurance is required prior to closing. Flood zones do change. If you are paying for flood insurance, it doesn't hurt to ask your town to check to see if you are still in a flood hazard area.
• Ask your agent "Is there any additional coverage, that can be added to this insurance policy, that you would recommend". Some agents might be reluctant to suggest expensive riders, and this will open the door. If you have a claim, the premium that you pay for certain insurance coverage will seem insignificant.