It is no secret that homes will cost money. So, if something like severe weather, fires, <vandalism> or another hazard damages the dwelling, then that’s a lot of money that you might lose on your investment. Your policy will usually cover damage to the structure. However, it will use certain formulas and conditions to determine how much to pay you. Here’s what to look for when setting up your policy.
Understanding Dwelling Insurance
Damage to your house (the dwelling) might result in quite a few repair costs. The good news is that homeowners insurance can often include dwelling protection. The coverage can pay when unexpected or unavoidable damage occurs to the structure. It can also include <other structures coverage> that will pay for damage to buildings like detached carports or fencing. Policies can also cover <living expenses> that you might face if you must move out temporarily.
What Will My Policy Pay Me?
Though structure insurance can be far-reaching, it will contain limits too. Primarily, the policy might exclude damage to certain items. It won’t pay if an excluded hazard damages the home.
Also, policies will use different formulas to determine how much they will pay for your losses. The most common formulas are:
- Replacement cost value (RCV) coverage pays you based on the cost to repair or rebuild the home at today’s costs. The value of certain items and labor costs might change over time, sp RCV coverage will take this into account.
- Guaranteed replacement cost value (GRCV) coverage will first pay you the replacement cost. However, it will pay you a certain value above the replacement cost, too. So, if your home has excess repair costs, then this coverage can help you cover them.
- Policies will include deductibles. Your insurer will subtract your chosen deductible value from your final settlement cost. So, if you make a $12,000 damage claim and you have a $1,000 deductible, then your policy will pay a maximum of $11,000 for the claim.
Some policies will only pay the actual cash value (ACV) of the home at the time of the damage. This is often the cheapest coverage option. However, the cash value is the used value of the home, so this might be less than the cost you need to rebuild the home. Most policies offer either RCV or GRCV policies, instead.
To choose the right coverage for your structure, choose a value that would offer you enough help in case of a total home loss. By choosing high enough coverage, you can rebuild without a significant financial strain.
Contact HIS Insurance & Services today for more assistance.