Ways To Make Sure You Have Enough Homeowner's Insurance Coverage
Hopefully, you will never have to worry about filing a homeowner's insurance claim, especially a total loss claim, but if you do, it will be a lot easier and helpful to you if you are fully insured. If you want to make sure you are fully covered on your homeowner's insurance policy, you may want to call your company and discuss the following issues with them.
The Amount Of Coverage For Personal Belongings
When you purchase homeowner's insurance, the agent will ask you a variety of questions. One of the main ones will be how much your house is worth. This amount is used to make sure your structure has sufficient coverage, but it can also be used to estimate the value of your personal belongings. Your personal belongings include everything you have inside your home, such as your furniture, clothing, and decorations.
A lot of insurance companies will recommend insuring personal belongings at 50% to 70% of the value of the home. For example, if your home is insured for $250,000, your personal belongings may need to be insured for $125,000 to $175,000. This amount may seem good to you; however, you should not just accept this amount without doing some research.
The Way The Insurance Company Calculates Payout
As you discuss this with your insurance company, you should ask how they calculate the amount they will payout for personal belongings if a total loss occurs. If you have $150,000 in coverage for personal belongings, your insurance company might not cut you a check for this amount, and this is one thing many policyholders do not realize. An insurance company is likely to determine the payout amount with one of the following methods:
- Actual cash value (ACV) – This method bases the payout amount on the actual current value of the goods you own, and this means it takes depreciation into consideration.
- Replacement cash value (RCV) – The other common method bases the payout amount on how much it will cost to replace everything you own. This method does not take depreciation of goods into consideration, and that is why this is the more preferred method for homeowners.
When you find out which method the company uses, you should also ask how they will know what items you actually own. They may tell you that you will have to provide a list of everything you own, but this is not always a great way to handle this. It might be better if you had a videotape of the contents of your home. You may want to update your video every couple months and keep it in a safe place so you can use it if necessary to prove what you owned.
The Things That Are Not Covered
Insurance companies also typically have exclusions to things that are covered. For example, if you had to make a list of everything you owned in order to make a claim, you might find out there are things the company will not reimburse you for. Examples of this can include expensive paintings, jewelry, musical instruments, and valuable collections.
If you want to make sure that everything you own is fully covered, you should discuss this issue with your insurance company before a major disaster happens. As you discuss this, you might learn that there are riders you can add to your policy to make sure these types of items are completely insured. A rider adds a specific amount of coverage for a specific item. If this item is destroyed in a fire or stolen in a home robbery, the insurance company will reimburse you for the full value of the item.
If you follow these tips, you can be certain that you will be fully protected if you lose your entire home. To learn more about this, contact a company that offers homeowner's insurance policies, such as Southern Family Insurance.