data-ad-client="ca-pub-1427585528506784" data-ad-slot="5673531157" data-ad-format="auto"

How to ensure your home insurance policy insures your home to value

How to ensure your home insurance policy insures your home to value

Every home owner takes a home insurance policy anticipating the insurer to make payments for repairs or replacements when the disaster strikes. However, most homeowners insure their homes for their mortgage value or the value of the home. This value is usually less than what it would cost to rebuild the home. If a disaster strikes, the insurer only pays part of the cost of replacing or repairing the damaged items. This may leave you to cater for the rest of the cost. If you have insured your home using the replacement value, the insurer pays for complete repair or rebuilding of the home. Below are some of the tips you can use to ensure that your home insurance policy insures your home to value.

•    Have an estimate of the rebuilding cost of your home. You can get this by multiplying the cost of building each square foot by the square footage of the house. You can get the building rates in the area by consulting the association of local builders or reputable builders your area. Your insurer or representative of the company may also know about the costs.

•    Know the factors that determine the rebuilding cost- there are various factors that determine the cost of rebuilding such as the costs of construction, the size in square footage and materials used to construct the wall such as frame, veneer or masonry. Others include the house style if it is colonial, ranch or contemporary, number of bathrooms and rooms, roof type, garages that are attached, fireplaces and special features. If your home has special features, more square footage and construction using expensive materials, then the rebuilding cost will be high.

•    Reevaluate your policy- make sure that each year you check your policy’s value against the rising local cost of building. This will ensure that you have enough insurance to cover the cost of rebuilding in case a disaster occurs. You should also check with your insurer if there is a clause for inflation guard. This adjusts the insured limit automatically when renewing the policy to give a reflection of the present costs of construction in the area. Make sure you keep yourself updated with the building costs.

•    Know about the latest local building codes- building codes provide the minimum standards in which homes should be constructed. A completely damaged home may require the rebuilding to comply with new standards by changing the design or materials for building. This can result to more costs. Familiarize yourself with the building codes and ensure that your insurance coverage is enough to cover the cost.

•    Do not use the market value to insure- the market value is different from the cost of rebuilding. It could be higher or lower. You should also not cover your home based on your mortgage value.

•    Include improvements- if you improve your home or make additions, ensure that you advise the insurer to adjust your limits to reflect the increased value of your home.

Related Posts

Write Comments

data-ad-client="ca-pub-1427585528506784" data-ad-slot="5673531157" data-ad-format="auto"
To our email newsletter

Write for us

At Home and Social, we want to provide useful information to readers in order to improve their overall home experience. Featuring topics including furnishing ideas, home security, DIY helpful tips, home upkeep, and interior design among others. Our mission is to be the best website...

view all