Free Home Owners Insurance FAQs | Free Home Owners Insurance Legal FAQs

What Affects Home Insurance Prices?

Tue, 29 May 2007 21:19:00 GMT

There are many factors that may affect home insurance rates. The following are the most common:

Types of Construction
Frame houses usually cost more to insure that brick houses.
Age of House
New homes may qualify for discounts. Some insurance companies may not insure very old homes or may offer a limited form of coverage.
Local Fire Protection
Your home`s distance from a fire hydrant and the accessibility of your home to your local fire department determines the fire protection classification.
Amount of Coverage
The amount of coverage you buy for your house, contents, and personal liability will affect the price you pay.
Deductible Amount
Your choice of a higher deductible will reduce the price for home insurance.
Discounts
Insurers may offer lower prices for such things as insuring your home and car with the same company and installing dead bolt locks or alarm systems.

Why Should I Buy Home Insurance?

Tue, 29 May 2007 21:19:00 GMT

Owners should buy home insurance to protect both their home and their personal property. Tenants should buy home insurance to protect their furniture and personal property. In addition, everyone should buy home insurance to protect against liability for accidents that injure other people or damage their property.

What Is The Difference Between Replacement Cost Vs. Actual Cash Value?

Tue, 29 May 2007 21:19:00 GMT

Replacement Cost is the amount it would take to replace or rebuild your home or repair damages with materials of similar kind and quality, without deducting for depreciation. Depreciation is the decrease in home or property value since the time it was built or purchased because of age or wear and tear. Many insurers require homeowners to insure their homes for at least 80% of the replacement cost. If the homeowner fails to insure for at least that, a penalty is applied to partial losses. For example, if it would cost $50,000 to replace your home and it is insured for $40,000 (80%), and a fire causes $25,000 worth of damage, then your insurance company will pay the full $25,000.

On the other hand, if your $50,000 home is insured for $30,000 and you suffer a $25,000 loss, your company would pay for only part of the loss and you would have to pay for the balance yourself. It may therefore be advisable to insure your home at a minimum of 80% of its replacement cost. Check with your agent or insurance company to see what is required. You may wish to insure at 100% of replacement cost so you will have sufficient coverage in the event of total loss.

Actual Cash Value is the amount it would take to repair or replace damage to your home after depreciation. For example, if your roof has a 20 year warranty and is 17 years old, there would be depreciation for the age and condition of the roof.

Most standard home insurance policies cover the contents of your home (i.e. personal belongings) on an actual cash value basis. Many insurers offer an option for you to insure your belongings at a replacement cost. The premium will be slightly higher for this coverage; however, you may want to consider the option.

Whether your home is insured for replacement value or actual cash value, it is important to keep track of its value. For instance, the addition of a room, improvements, and yearly inflation all increase the replacement cost of your home, while the actual cash value of the home may decrease over time.

Check with your agent or insurance company at least once a year to make sure your policy provides adequate coverage.

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