Whether your lender requires it or not, home insurance is a must. But not everyone realizes that the homeowners insurance policy required for their lender may only cover the value of their mortgage, meaning it may not cover the value of all of the items in their home.
Take A Home Insurance Inventory
Most people vastly underestimate the value of their belongings. If you don’t accurately assess the value of your property, you may not carry adequate insurance. A recent study found that 75% of homeowners don’t have a policy that would fully cover their home and belongings in case of a disaster. In short, your belongings are probably more valuable than you think.
Sometimes homeowners will try to lower their home insurance premiums by dropping the amount that they get covered, but this may be a dangerous move as it makes it more likely that you won’t cover all of your property. The best way to estimate the actual value of your belongings is to take an inventory.
Walk through your home, from room to room, and document every item you own that is worth $50 or more. Also, if you want to be especially thorough, take pictures of the items and do a video tour walk through of your home. Email a copy of this inventory to yourself and store your pictures and videos on a cloud server such as Google Drive.
All of these steps might seem like a hassle, but when the time comes to readjust your coverage or, worst case scenario, make a claim on damaged or lost coverage, you’ll be prepared.
What Your Home Insurance Covers
1. Natural disasters such as fires and storms
Fire and storm damage can affect any home at any time, but living in the Hampton Roads area may mean that you’re located in a flood zone as well. In that case, extra flood insurance may be a necessity for you.
2. Personal liability situations
If your dog bites your neighbor while on your property, you may have a lawsuit on your hands. Homeowners insurance can pay for that injured party’s medicals bills, possible damages to your property, and also pays for an attorney to defend you if your neighbor pursues legal action.
3. Vandalism and theft
No one wants to think that they live in a bad neighborhood, but theft knows no bounds. In fact, neighborhoods that are perceived as being more affluent can be hotspots for crime simply because bad guys will assume they can find higher value items in those homes.
Coverage Type: Actual Cash Value vs. Replacement Cost
When you first get your policy, it’s important to know the difference between actual cash value coverage and replacement cost coverage.
Actual cash value, a less common type of coverage, pays you the amount it would cost to replace or repair your belongings and property, including depreciation. For example, if you bought a dishwasher seven years ago for $450 and it was destroyed in a fire, your policy would pay the amount the same dishwasher is worth today, including depreciation, not the original amount you paid for it.
With replacement cost coverage, the most common type of home insurance policy, your insurance company pays you the actual cash value of your lost property (including depreciation), then, once you have repaired or replaced the property, your insurance company reimburses the difference.
The website nationwide.com simplifies the differences with these short definitions.
Actual Cash Value = The value of the property lost or damaged at the time of the loss. This type of policy includes depreciation which is defined as “a decrease in the value of property due to wear, age or other cause.”
Replacement Cost: The cost of replacing damaged or destroyed property.
Review your homeowners insurance needs each year to account for additions to a home such as a deck or new valuables such as a big screen television.
Available Home Insurance Discounts
Remember that some insurance agencies may even offer discounts. At WBR, we offer a multi-policy discount of up to 20% on a homeowners insurance policy when you get your auto insurance through us as well. We also have the following discounts available:
- Claims-free discount up to 20% when you stay claims-free.
- Age of construction discount up to 30% based on your home’s age.
- Age of insured discount up to 15% may apply if you’re 60 or older.
- Personal status discount up to 5% if you’re widowed or married.
At WBR Insurance we offer 24/7 claims services. We are here to help you and answer your questions about homeowners insurance, whether you need help restoring or replacing what you lost, or help getting compensated for injuries on your property. For more information on home insurance or to get a personalized quote, give us a call at 757-340-0028.