Insurance has become a necessity in today’s world full of uncertainties. When you have worked hard to acquire property such as a home or car, it makes sense that you want to protect it from any potential damages, financial or otherwise. The best home and auto insurance company is, therefore, important to ensure that you protect your home and all the valuable possessions in it from damages by both natural and manmade causes as well as the financial and legal implications of this damage. It is important to familiarize yourself with the different components of a home owner’s policy and keep up to date with any and all changes.
What Exactly Does Homeowner’s Insurance Cover?
The coverage received from a home owner’s policy can essentially be categorized into two broad forms; the structural coverage, and personal belongings. Structural coverage extended to your home by any given policy can be further divided into three subcategories. First, you have the replacement cost which is the money paid to the policyholder to go towards the cost of repairing and replacing any damaged property. This cost is free of deductibles, but it is limited to a given amount.
Next, we have the extended replacement cost. This policy, like the name suggests, is an extension of the first category. It works by allowing your insurer to exceed the set limit for the replacement cost. This policy applies where there are sudden changes to the costs of repairing and replacing damaged property and usually offers an extension of up to 20% of the limit. Lastly, we have the actual cash value. This takes into account the depreciation of the property when calculating the cost of repairing or replacing one’s home.
Insuring a person’s belongings under a home owner’s policy works much in the same way as insuring the actual structure of your home. Personal belongings are subjected to replacement costs and actual value costs in the same way that the structure gets.
Insuring Your Home for the Right Value
It is a common misconception that a home should be covered based on its market value. Since this value is subject to change based on several factors, it is prudent to insure your home based on the amount it is going to cost to repair or rebuild it if it is damaged. An assessment of the rebuilding or repair costs should be done under the guidance of a building professional and your insurance agent before settling on any given policy. The factors that influence the rebuilding costs include the actual construction costs, the size of your home, and the style and type of finishing of your home.
Insuring Your Personal Belongings
When it comes to personal belongings, it is important to ask about the limit extended to your personal items by the best home and auto insurance company. If the limit is insufficient, you have the option of insuring these separately through a special personal property endorsement. An up to date inventory of your valuable possessions is important. Besides making a list of all that you own, including information on the serial numbers, buying price, market value, model number, and purchase date of your items.