Have you ever wondered how your insurance company determines how it will reimburse you for homeowners insurance claims? What if you had a total loss? Would you be able to rebuild? The answers to these questions depend on the type of home insurance policy you have and whether the value of your home is based on its replacement cost or its actual cash value.
Insurance companies provide coverage for your home and possessions based on either their actual cash value or their replacement cost. Actual cash value home insurance policies provide coverage for what your home is worth at the time of loss. Replacement cost policies will reimburse you for what it would cost to rebuild your home using all of the same materials at today’s prices.It is important to remember that your home’s replacement cost is not the same as its market value, or how much you could sell it for. A home’s replacement cost for insurance purposes is based on a number of variables that determine what it would cost to rebuild your home with similar materials at today’s costs. The variables that make up your home’s replacement cost will fluctuate over time, so the number is not set in stone. You will need to review your policy at least annually to make sure that your replacement cost figure is keeping up with the times.
How should you determine your home’s proper replacement cost? Your insurance company will likely ask you a series of questions about your home and your responses will be plugged into a model that determines its replacement cost. Your job is to have some idea of whether or not the figure is accurate so you can be assured that your home is properly protected or that you are not over-insured. Consider talking to some home builders in your area as well as visiting some home improvement stores to help figure out what it would cost to replace your home’s interior and exterior finishes (including labor) at today’s prices. Together we can make sure that your home is properly insured and its replacement cost is accurate.
Don’t forget to evaluate your personal property coverage as well. Personal property coverage in a homeowners insurance policy typically starts out at a percentage of your home’s dwelling coverage, but if you feel you need more coverage because of certain valuable items, don’t be afraid to increase your personal property coverage limit or add special riders or endorsements to protect your valuables. Preparing a home inventory is extremely helpful in determining if you have sufficient coverage for the contents of your home.
Once you have settled on a replacement cost figure, remember that it will need to be re-evaluated every year to account for changes in building materials and labor as they fluctuate over time. We will work closely with you to determine the replacement cost of your home and belongings, and we can help you with auto insurance, personal umbrella insurance and any other personal insurance needs that you may have.
Have you reviewed your homeowners insurance policy lately? Are you satisfied that your replacement cost figure is accurate? Do you need to upgrade your actual cash value policy to a replacement cost policy?
Home Insurance Policy - Terms Defined
http://www.rmiia.org/homeowners/Walking_Through_Your_Policy/Glossary.asp
Actual Cash Value The cost of repairing or replacing damaged property with property of the same kind and quality, less depreciation (i.e., in the same physical condition as the original property prior to damage). Additional Coverages Extra coverage that can be purchased to provide protection above and beyond that provided in the homeowners policy (e.g., a higher amount of coverage against the theft of jewelry). When such additional coverage is purchased, it becomes an Endorsement or Rider to the original policy. The part of homeowners insurance that provides reimbursement for motel rooms, meals and other expenses when loss of property by a covered peril forces you to maintain temporary residence elsewhere. Also called loss of use coverage. Adjuster An insurance company representative who seeks to determine the extent of the insurer's liability for loss when a claim is submitted. Agency An insurance sales office that is directed by a general agent, manager. independent agent or company manager. Agent A person licensed by a state insurance department who solicits, negotiates or effects insurance contracts on behalf of one or more insurers. Captive Agent An agent who sells insurance for one company. Catastrophe To insurers, a catastrophe is a single incident, or series of related incidents, causing insured property losses totaling more than $25 million. Insurance actuaries calculate the probability of catastrophic loss on a state-by-state basis, using a formula based on the total number of catastrophes in each state over a 40-year period. This catastrophe factor, calculated annually, is included in the price of insurance. Claim A demand made by an insured, or an insured's beneficiary, for payment of benefits provided by an insurance policy. Condominium Owners Insurance Though similar in personal property and liability coverage to homeowners insurance, structurally the condo owner's policy is from the "walls in" and does not cover the building itself. Coverage The scope of protection provided under an insurance contract. Depreciation A decrease in the value of property over a period of time resulting from use, obsolescence or wear and tear. Dwelling Policy Though similar in personal property and structural coverage to a homeowners policy, a dwelling policy excludes liability coverage. Emergency Measures Those repairs or other actions taken to protect the insured and the insured's property from further loss when damaged or destroyed by a covered peril. An attachment to an insurance policy that amends and alters the coverage provided in the policy. Also called a Rider. Exclusion Specific situations, conditions or circumstances that are listed in the insurance policy as not being covered. Floater Property insurance for items that are moved from location to location, covering losses wherever they occur. It is typically bought to cover jewelry, furs and other items whose full value may not be covered in standard homeowners policies. Homeowners Insurance A "package" policy providing coverage against property and liability perils facing homeowners. Independent Agent An agent who represents more than one insurer. Insurance A formal device for reducing the chance of loss by transferring the risks of several individual entities to insurance companies. Insurance Commissioner The head of a state's insurance regulatory agency. Also known as the Director or the Superintendent in some states. Insurance Fraud Intentional lying or concealment by policyholders to obtain payment of an insurance claim that would otherwise not be paid. Insured The party covered by an insurance arrangement, to whom an insurer agrees to indemnify for losses, provide benefits or render services. Individual responsibility for causing, through negligence, injury to another person or damage to another person's property. Also called Personal Liability. Liability Insurance Insurance that pays and renders services on behalf of a policyholder who is unintentionally, but legally responsible for bodily injury or property damage that is caused to another person and covered in the policy. Loss of Use Market Value The price for which something would sell under current market conditions. Ordinance or Law Exclusion Homeowners policies may exclude situations where repair or replacement of damaged property must be done in conformance with building codes requiring upgraded materials. A standard homeowners policy may cover only the cost of replacing or repairing with the original grade of materials. The difference in cost between the old materials and the new materials required by ordinance or law is excluded or limited, unless the homeowner has purchased additional coverage. Package Policy A single insurance policy that combines several coverages available separately. For example, homeowners insurance is a package policy, combining property, liability and theft coverages. Peril A property insurance term referring to the possible cause of loss such as a fire or a windstorm. Personal Liability See Liability. Personal Property All tangible property not classified as real property. Policy A written contract for insurance between the insurance company and the policyholder, stating which perils and damages are covered and which are not. Premium The amount of money an insurance company charges, based on a given rate, to provide the coverage described in the policy, or, simply stated, the price of insurance protection for a specified risk for a specified period of time. Typical homeowners insurance premiums are charged annually. Property Coverages Insurance that covers damage to or loss of the policyholder's property. Rates The cost of a unit of insurance as determined by insurance companies and state regulators. The rate serves as the basis for the premium. Real Property Land and most things attached to the land such as buildings and vegetation. Regulation Insurance is a state-regulated business. State insurance laws are administered by insurance departments, whose job includes approval of rates and policy forms, investigation of company practices, review of annual financial statements, periodic examination of books and liquidation of insolvent insurers. Renters Insurance A form of homeowners insurance offering coverage for personal property and liability, but excluding real property. Replacement Value The cost of replacing property without deducting for depreciation. Rider See Endorsement. Risk This word has two meanings for insurers: (1) the chance of loss, such as from a peril; and (2) the person or entity that is insured by a policy. Underwriter A company representative who reviews applications for insurance coverage to ensure that they are acceptable and appropriately priced. |
Your Trusted Choice Insurance Agent, SouthGroup Insurance Gulf Coast wants you to know you can call on us with your questions or concerns seeking more helpful advice or answers to your pressing insurance questions. A full insurance review is always your best bet to make sure you have all of the adequate coverage for your personal insurance needs. Remember, we offer a personalized insurance review to anyone who is interested at no charge – just visit any one of our convenient locations!
To help you through the maze of coverages, carriers, premiums, and find ways to save money on your insurance, if you are on the Gulf Coast, contact your Trusted Choice agent, SouthGroup-Gulf Coast http://www.southgroupgulfcoast.com/ , SERVICE TEAM: Angelyn Treutel, Tammy Garfield, Tammy Hogue, Melissa Dunn, Alex Treutel, Anne Gillam, Mark Strickland, Joseph Eagle, Michael Scardino, Melinda Teaford, Wendy Butler, and Brittany Eagle at SouthGroup Gulf Coast. You can reach us by snail-mail: 412 Hwy 90, Suite 6, Bay St Louis MS 39520, email: info@southgroupgulfcoast.com, phone or text:228-466-4498 or 228-385-1177, fax:888-415-8922, FaceBook www.facebook.com/southgroup.gulfcoast , or Twitter www.twitter.com/atreutel ! We now have more locations to serve you - 2505 Pass Road - Biloxi and 412 Hwy 90 Ste 6-Bay Saint Louis, MS.
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