Tips Trick Of Home Insurance

Life Insurance - Tips Trick Of Home InsuranceYou've been searching for the perfect house for months. Finally, you find the one. After your offer is accepted and a small mountain of paperwork is signed, it's yours. What are you going to do next?If you're smart, before you pack a single box, you will make sure your home insurance has you covered for whatever life might have in store. While your mortgage lender likely requires you to carry some level of home insurance, don't assume that amount will protect you from financial disaster.





Donald Griffin, vice president of personal lines for the Property Casualty Insurers Association of America (PCIAA), offers these tips.

Tip No. 1: Insure for your home's replacement cost

Here's one of the most common mistakes homeowners insurance  make: Confusing a house's market value with its replacement cost. Your home insurance coverage should cover the cost of rebuilding your house if it is destroyed. "The best indication [for coverage] is the cost to build a new home," Griffin advises. "With an existing home, look at the replacement cost rather than the market value." This is often less than what you paid for your home; if you're insuring your house for its market value, you may be overinsuring it.

On the other hand, if you bought a foreclosed home, the price you paid may not accurately reflect construction costs to rebuild it.

To determine the replacement cost, most home insurance companies use software that allows them to enter your home's features and calculate the cost of replacement. In addition, most policies include coverage for up to 125 percent of the replacement cost.


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While it may be tempting to use this buffer as a reason to purchase less coverage, the reduced cost may not be worth the risk you take in having inadequate coverage. Griffin says it can be less expensive to rebuild a home than to do extensive remodeling, and many home insurance claims are for only partial damage to a home.

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