Home Insurance
Shane Harder
When you consider home insurance, you should always insure your home for the total amount it would cost to rebuild the home if it were to be destroyed. Neglecting home insurance could result in your insurance company only having to pay a portion of the cost to replacing / repairing the damage. There are three ways to insure the structure of your home…
1. Actual Cash Value: Home Insurance under this policy would receive a dollar amount equal to the replacement value of the damaged property. Some policy makers deduct a dollar amount for depreciation. Actual cash value is almost always less then the replacement value of a home.
2. Guaranteed Replacement Cost: This would be home Insurance that pays the FULL cost of replacing damaged property. There will be no deduction for depreciation and no dollar limit. Some companies do limit this coverage to approximately 120 percent of the cost to rebuilding the home.
3. Replacement Cost: This policy home Insurance plan pays you the cost of replacing the damaged property. There is no deduction for depreciation and you are limited to a maximum dollar amount.
You can always calculate a quick estimate on the dollar amount to rebuild your home. Simply multiply the local building costs per square foot by the total square footage of the house. If your not sure about the local building costs you can consult the local builders association or a real estate appraiser.
Factors that will determine the cost to rebuild your home:
1. The square footage of the structure
2. The Local construction costs
3. The style of the house (ranch, basement entry)
4. The number of bathrooms and bed/guest/living rooms
5. The materials used in the roof
6. Attached garages, fireplaces, exterior trim and other special features.
Consider checking the value of your insurance policy against rising building costs each year. You should think about adding a "Inflation Guard Clause" to your policy. That way your policy will adapt to rising buildings costs and your policy will reflect current construction costs.
Shane and Sheleana Harder own and operate BCHN.com, working to provide their clients with nothing but the best in quality education.
Home Insurance
