Home insurance is the most overlooked insurance policy because it often gets paid by the mortgage company.
When people buy a house, they may use the home insurance company they have used in the past or the one the mortgage company recommends. However, the mortgage company only cares that the loan amount is covered, and doesn’t care that your personal property value is low, or that your personal liability is below what you should be carrying. Homeowner insurance can start around $300/year and go as high as $3,000+. So why wouldn’t you check your coverage premium, at the very least, every three years?
Like auto insurance, home insurance can be a burden to many people, and they just want to get it over with and take the cheapest premium they can obtain. Do they know what insurance company is covering them and the strength of that company? In late 2010, Arizona had a hail storm that destroyed the roofs of many homeowners, but the insurance companies many people used carried an ACV, or Actual Cost Value, on the roof of their home.
So what is Actual Cost Value?
The ACV is the value of your roof with depreciation calculated into the value. In 2010, homeowners made claims on the roof damages only to find out, for example, instead of receiving $20,000 required to replace their roof they only received $6000 because the depreciation reduced the value of the home. Homeowners were irate but couldn’t do anything about it.
I can tell you I never cover a roof with an ACV; rather I always set it to the replacement value (RCV).
What about insuring your personal property?
Is it covered with ACV or RCV? If you are covered with ACV, that television you bought five years ago for $2000 is now worth only $500, and that is what you receive if it is stolen or victim to a fire damage. If you are covered via RCV (which is the only coverage I provide even though I have the option for ACV) you will get the $2000 to purchase a new television.
Personal Liability Insurance
Are you covered for $100,000, $300,000, $500,000, or more? What is personal liability? If your dog bites someone, your personal liability coverage steps in to cover the loss. If someone trips on a cord on your floor and hits their head, again, personal liability steps in to protect you. What if you have a pool and something terrible happens? Your personal liability protects you. But what home insurance coverage is best? In today’s litigious society, the minimum I input is $300,000, but I most times I use $500,000 because the price difference may only be $10/year.
Contact me today about your home insurance and let’s see if we can save you money and protect your assets better than your current policy.