You may be shopping your homeowners insurance now, or you may have shopped your insurance in the past. During that process one of the major items that need to be discussed is your dwelling value. When you looked at the quote what did the dwelling limit say? Did it say actual cash value, or replacement cost. Was that number at 100% of your replacement cost estimator or was the value below that? Picking the proper dwelling limit is very important for you the policy holder. Picking the wrong valuation amount could mean that you get a percentage of what it actually cost to fix your home. Actual cash value is one type of valuation that could impact you in the event of a claim. An actual cash value policy subjects you to depreciation for your home that you would typically not be subject to on replacement cost. Another valuation method is replacement cost. This valuation is just what it sounds like, it is for the cost to replace or repair your home in the event of a claim. Replacement cost is a good place to start but it can be done incorrectly and affect you the client. One other thing to look for is if the replacement cost has a cap. Some homeowners policies come with a cap over replacement cost, 10, 15, or 25% are common caps with some companies offer guaranteed replacement cost. What this means to you the customer is that cap number is the most amount over the dwelling number your policy will pay in the event a claim exceeds your dwelling limit. This gap amount is for your protection and should be used if your dwelling rebuild out paces inflation or you do a home improvement project that adds value to your home and you do not notify (or forget to notify) your agent to make a policy change. This increased limit should not be used to insure your home for an incorrect value to obtain a lower premium. This practice could set you up for not receiving the proper valuation in the event of a claim. Your homeowner’s policy protects one of your biggest assets, it is important it is insured properly. Give us a call to discuss if your homeowners policy properly covers your home and to see if we can find you the right coverage, at the right price.
