UNDERSTANDING YOUR Homeowner’s Insurance POLICY

Understanding Your Home Insurance Policy – Carlos Villalobos

UNDERSTANDING YOUR Homeowner’s Insurance POLICY

If you own a home, every year you face the daunting task of reviewing your homeowner’s insurance policy to make sure you’re adequately covered. Let’s have a look at what you need to know when buying or reviewing your homeowner’s insurance.

Home Insurance Policy - Carlos VillalobosDid you know you need to have insurance for a minimum of 80% of your value excluding land? That means the value of your home, everything in it, any additional buildings like a garage, and everything in it. Do you have adequate insurance? Make sure you are proactive and have the correct coverage, before something ‘bad’ happens, and you find out you are not properly covered. In fact, you should review your policy annually to make sure you still have adequate coverage. We tend to buy things and then forget about them.

When you are reviewing your policy, there are a few things you should know about your home insurance policy:

DECLARATION PAGE

This is an annual contract that you have with your insurance company outlining your coverage and premium.

ACTUAL CASH VALUE COVERAGE

There seems to be some confusion between this coverage and replacement cost. If you purchase a homeowner’s policy that pays actual cash value on your content, should something happen, you will receive a payment for what the item was worth at the time of the loss, not what it costs to replace it.

FULL REPLACEMENT COST COVERAGE

This is best type of coverage to carry. With full replacement coverage, if your property is destroyed, the insurance company will pay the full replacement cost or rebuild your property to the state it was prior to the loss, without any depreciation. Buying this type of coverage costs you no more than 20% more a year, and covers stolen, lost, or destroyed items. It’s definitely worth carrying comprehensive homeowner’s coverage.

GUARANTEED REPLACEMENT COST

Again, there’s a great deal of confusion between guaranteed replacement cost and full replacement cost. These coverages are not the same. The latter is related to your contents, and the guaranteed replacement is related to the buildings and structures. With guaranteed replacement cost, your insurance company agrees to pay for the damage in a covered loss even if it exceeds your policy’s limit. The insurance company is obligated to rebuild or fully replace your property without any depreciation deductable. However, with this type of coverage, insurance companies always include a clause that maximizes how much they will pay out. Generally no more than 25 to 50% above the value you have your home insured for. You want to be sure you get back to where you were prior to the loss. If you haven’t had an appraisal of your home in the last decade, it would be a good idea to do so. That way, you can make sure you have adequate insurance coverage and aren’t underinsured.

RIDER

A rider is an insurance addendum that is added to your existing policy to cover specific items that are not covered or not fully covered under your insurance policy. People will often buy a rider to cover their jewelry and valuable items. In order to cover an item on a rider, you need to have either the receipt or an appraisal. A rider allows you to make sure that you will have proper coverage for a specific item(s).
Your home is one of the biggest assets you own and having the adequate coverage should a loss occur is peace of mind.

The bottom line is don’t just automatically renew your policy this year. Call Carlos Villalobos for a complimentary policy review to make sure you’re fully covered, and you’re not paying too much. Carlos can be reached at 661-255-8282 or through his website at www.carlosvinsurance.com

If you own a home, every year you face the daunting task of reviewing your homeowner’s insurance policy to make sure you’re adequately covered. Let’s have a look at what you need to know when buying or reviewing your homeowner’s insurance.

Share the Post

About the Author

Comments

Comments are closed.