Home Insurance 101
Home insurance provides financial protection against losses relating to an owner occupied residence. A basic policy insures your building structure and your contents.
Homeowners insurance is a package policy which means that it covers both damage to your property and your liability or legal responsibility for most injuries and property damage you or members of your family cause to other people. This includes injuries caused by household pets and injuries incurred by workers who you hire to do work around your home. Minnesota Law requires that you provide workers compensation insurance coverage for those who you employ to work around your home if they received $1000 or more in compensation within the last 3 month period. Your homeowner's policy will likely exclude liability for situations like this.
Damage caused by most disasters is covered but there are exceptions. The most significant is damage caused by floods, earthquakes and poor maintenance. In Minnesota and Wisconsin, earthquake is available from most home insurers as an option. However, flood insurance must be purchased separately. Coverage is written through the National Flood Insurance Program (NFIP) and s available in most communities. Contact your Local Independent Insurance Agent or us to obtain coverage.
The Importance of Dwelling Replacement Cost
Your home may be the biggest investment you'll ever make. So if you're serious about protecting that investment, there 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. With the help of your Independent Insurance Agent, determine the appropriate amount of coverage required on your home.
You can also get an estimate of the replacement cost of your home through an appraisal company or by use of estimating software.
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 unforseen circumstances.
Understand the difference between market value and replacement cost for insurance purposes can be confusing.
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 building structure.
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.
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.
What is Home Guaranteed Replacement Coverage?
If your house was damaged or destroyed by fire or natural disaster, would your insurance cover the cost of rebuilding it? Before you answer -- even if you see the word "replacement" in your policy, don't assume that your insurance company will pay to replace everything and all your costs would be covered.
Why not? Because the good, old-fashioned term "guaranteed replacement coverage" is quickly becoming a thing of the past. It used to be common for homeowner's policies to offer this coverage, which provided the peace of mind that your home would be protected regardless of rebuilding costs. If your policy was for $100,000, but it cost $200,000 to rebuild, the insurer would have covered it all.
But that was the 1980s. Today, policies usually specify coverage of what's called "replacement coverage" or "extended replacement coverage." To clairfy
"Guaranteed replacement coverage" means that in a total or near-total loss, the insurer will pay out the necessary amount to rebuild or restore the home, no matter what the cost -- not including such things as antique, hand-carved doors, for example
Looking for a Homeowners Policy with Guaranteed Replacement Coverage call us. W have several companies that offer this important coverage.
Get a Home Insurance Quote Now or call us at 952-469-0414.