Cover your Assets with a good Insurance Policy
Today, we have to cover our assets in every way possible. Why? Well, the cold hard truth is that now-a-days, it seems like everyone has gone a little “sue-happy”.
Insurance policies are the best way to make sure you and your loved ones, yes, even your pets, are covered in case of an accident. This is especially true when it comes to homeowners insurance. When thinking about purchasing a new policy, everyone wants to know the answer to the same question: How much is homeowners insurance?
Well, well, well…
Good question; hard to answer. There are several different types of insurance, depending on your family’s personal needs. For instance, not everyone owns a pool. Not everyone owns a trampoline, or a dog – you get the picture.
The main area of focus, no matter the insurance coverage, is to secure the PROPER coverage based on your personal needs. All insurance agencies work with a tool which allows them to calculate just how much replacement value your home has, and also takes into consideration each feature of your home – do you have a swimming pool? A pond? A fireplace?
You would normally consider things that would increase the value of your home to be items like a in ground pool, a fireplace, or marble flooring in your bathrooms, but even crown molding and living within a certain number of miles from a Wal-Mart can increase your property value. Basically, any features you have added to your home should be included in your insurance coverage, so be sure to double check for anything you may have left out. Remember – if it’s not listed, it’s NOT covered!
What Is Guaranteed Replacement Cost?
GPC, or Guaranteed Replacement Cost, is what insurance companies use to make sure that everything in your home is covered, and would be fully covered if needed replaced, or repaired, according to the value of the property at the time of damage (or when it was destroyed). In a nutshell, what all this means for you, is that most companies require that you insure the entirety of your home for the entire RC, or replacement cost, in order to qualify for their GRC coverage.
NOTE: This is one of the most important parts of home insurance and coverage… Make sure you ask your agent tor their specific terms on the RCC (replacement cost coverage). While it may end up costing you a little more in the long run, you will thank your lucky stars for making the decision to go this route, in the event of a complete loss!
Basically, what this means is that any personal property covered by the HCI, or Home Contents Insurance, is anything in your dwelling which is not “nailed down” – not affixed to your home itself. It is common for insurance companies to calculate just how much they are willing to pay for your personal property anywhere from 50 percent to 70 percent of the overall price of coverage.
For example, let’s say your estimated replacement cost of your home is $250,000 – this would bring your PPC to an estimate somewhere between $125 and $175,000, depending on which coverage you go with. Although it may not seem like much, you might be surprised at just how fast your potential for loss can grow, when you calculate the singled out value for each and every object, every single item in your home.
How Much Coverage Will I Need To Purchase?
There is a certain degree as to how much of a choice you really have when it comes to just how much home insurance coverage you will need to buy. Basically, it all boils down to 2 parties who have the ability to determine this for you: Your insurance company and your mortgage lenders.
Your lender will ask you to carry home insurance basically as a security to their investments – the mortgage company will require home insurance pay of at least 80 percent of your home’s value – or some home insurance companies may require up to 100 percent of the total amount of your mortgage. Either way, you will need to purchase insurance to cover your lender requirements.
NOTE: In the case that your home were to be destroyed, this does NOT mean that you will be released from the mortgage agreement you signed when you purchased the home! It would be your best bet to get the proper home insurance that would cover your home in the event of total loss, so that it could be properly replaced, and you could continue on with your mortgage agreement.
Basically, your home insurance company wants your coverage to reflect just how much your home’s FULL-replacement cost would be – This way, they are able to absorb the risk-of-loss, and your insurance premiums pay for the value which would be at stake in the first place. Because of this, most contracts will include a little clause which states that if your home is insured for less than 80 percent of the RC, the policy holder, YOU, would be penalized at the cost of a reduced payment for the particular covered loss.
Homeowners insurance is required, because it protects you in the event that something tragic were to take place. If someone falls, gets bit, or suffers some other form of injury or damage on your property, you would be found legally responsible for the cost of the damages or injuries, which could get pretty darn expensive! While your homeowners insurance can cover most medical bills, this usually only happens when you are sued by the injured party.
Liability homeowners insurance coverage will protect you from any occurring lawsuits, which may arise from any given number of injury/damage situations. This is a very important part of your insurance policy, and can vary in price depending on what you have on your property – such as a pond, lake, trampoline, etc. You will need to assess the situation to be sure just how much protection you need to include on your policy – no one likes to be targeted in a lawsuit they can’t afford.
You should really sit down, and write out what you have, and weed out anything that seems like an unnecessary object which may cost you more for coverage. Many parents will ditch their above ground pools and trampolines because it just costs a ridiculous amount to cover, others keep them despite the cost. Determine how much insurance coverage you will need before shopping for the best priced policies for your families budget