|
How to determine your homeowner's coverage
Your home may be the biggest investment you'll ever
make. So if you're serious about protecting that
investment, here is some important information to
consider when determining the coverage amount for
your home.
Make sure that your home is insured for at least
100% of its estimated replacement cost
To determine your amount of homeowners coverage:
- Get an estimate of the replacement cost of
your home, and
- Select the coverage amount that best fits
your needs.
We recommend that you purchase an amount of
coverage at least equal to the estimated replacement
cost. But the choice is yours. Determining your
home’s estimated replacement cost is important
because this will ultimately determine which policy
options are available to you. Since it is impossible
to predict today what the exact cost will be to
replace your home in the future, it’s important to
have enough coverage to account for unforeseen
circumstances.
Understand the difference between market value and
replacement cost for insurance purposes
Market value is the amount a buyer would pay for
a home, including the land, regardless of how much
it would cost to rebuild the home. Replacement cost
for this purpose is the rebuilding cost necessary to
repair or replace the entire home.
Replacement cost IS NOT:
- The market value of the home.
- The home’s purchase price or the cost of the
land.
- The outstanding amount of any mortgage loan.
When buying a new home, be sure to obtain a
replacement cost estimate
Before you purchase a new home, make sure that
you determine the appropriate amount of coverage
needed. Here’s how:
- Ask if a replacement cost estimate is
available when you have the home appraised.
- Or, consult with your local builder
association or a reputable builder for an
estimate.
- You can also check with your Oliver
Insurance agent to help you with this process.
Be aware of any architectural details or unique
building materials that may affect your estimated
replacement cost, such as:
- Upgraded bathrooms or kitchens (including
cabinets).
- Additional rooms.
- Custom molding or arched windows.
- Other unique features.
A contractor or appraiser can help estimate your
home’s replacement cost
Building contractors or professional replacement
cost appraisers are a good source for obtaining an
estimated replacement cost of your home. Estimates
from these sources should reflect your home’s
features, like those mentioned above. If you are
unable to obtain a detailed estimate from these
sources, your Oliver Insurance agent can discuss
other options for estimating the replacement cost of
your home.
Review your policy annually to make sure that your
coverage meets your needs
Have you recently remodeled or improved your home?
When you
upgrade or improve your home, you may increase your
home’s estimated replacement cost. Contact your
Oliver Insurance agent and adjust your policy
accordingly when you remodel or make improvements to
your home.
Has the rate of inflation risen since your last
appraisal?
Policies
provide coverage that automatically
adjusts each year in an effort to compensate for
increases in construction costs in your area.
However, certain conditions such as severe weather
can increase the demand for labor and materials, and
raise costs beyond normal inflation. It is important
to update your coverage amount each year to keep up
with the changing economy.
What influences the building costs in your area?
Market
conditions in your area may impact the amount it
will cost to rebuild your home if you experience a
loss. Replacement cost estimates are influenced by
supply of labor, demand for labor, and the cost of
construction materials. Keeping up with the current
market conditions in your area, and changing your
coverage amount accordingly, will help you maintain
coverage at least equal to 100% of the estimated
replacement cost coverage for your home.
|
