Time for a Home Insurance Check-Up?

August 5th, 2007 by Jeannine C

When was the last time you checked-up on your home owners insurance policy?  If it has been more than a year, its time!  Here are some questions to ask your insurance company about your policy.

Do I have adequate coverage on my home and contents?
If building costs have increased in your area, or you have added to your house, like putting on a deck or adding a room addition, your home could be underinsured.  Home insurance is usually based on “replacement cost,” so if your policy is valued at too low of an amount, you could be in trouble in case of a total loss.

Your homeowners insurance policy also covers your personal property, like clothing, furniture, appliances, and the myriad of other items inside your house.  Unless your policy has a provision to adjust for inflation, you will want to make sure that the coverage is sufficient to replace all that you own.  Special high-ticket items, like computers, cameras, jewelry, or valuable collections may require an additional rider and premium to be included on your policy.  So if you finally bought that 1952 Mickey Mantle card, make sure your insurance company knows about it!

Is my coverage based on Replacement Cost or Actual Cash Value?
Replacement Cost is the actually cost to completely repair or replace your house and your belongings without deducting for depreciation.  Actual Cash Value also replaces lost items, but includes depreciation as a factor, so if something were to happen, you may not receive a large enough payout to buy everything you need.  Replacement cost is slightly more expensive than Actual Cash Value, but in this case, it is worth the extra dollars.  Either way, there usually is a limit to the total amount your insurance company will pay, so make sure it’s enough!

Listen to Time for a Home Insurance Check-Up?
Listen to Time for a Home Insurance Check-Up?

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