Do you have enough insurance?

By admin • August 27th, 2011

Most homeowners policies cover the cost to repair or replace your home or other damaged property – with materials of like kind and quality.  However, you must have insurance for  your home’s full replacement cost in order to collect the full value.   Replacement cost is not the same as market value.   If you carry less than the replacement cost of your home, you will recover only a percentage of your loss, even if it is only a partial loss.

Example:  Your home’s replacement cost is $400,000, but you have it insured for its market value, which is only $300,00.   Your roof is damaged in a hurricane, and it will cost $10,000 to repair.   Because you only carry 75% of the replacement cost of the dwelling, your insurance company will pay 75% of the claim, or $7,500, minus the deductible.   If you haven’t updated your policy, call your agent.

 

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