Understanding Your Homeowners Insurance Coverage Options

There are many terms and phrases that you may run across in your insurance coverage.  Here are a few of them, and what they mean for you:

Replacement cost coverage - This coverage will help you repair or replace any personal property you’ve lost.

Guaranteed replacement-cost coverage - This coverage is the top of the line.  If you have this coverage the insurance company will actually pay to replace your home, no matter what, back to the state is was in at the time of the incident.  The coverage help protect people from the rising or falling housing market.  While some older homes may not qualify, it is always good to ask.

Actual cash value - Unlike replacement cost, this coverage will only pay for what the home was worth when the incident happened.  In short, they will subtract any depreciation that took place.

Other coverage terms:

Structures other than dwelling- This coverage is normally limited to about ten percent of the value of the policy, but covers things not attached to the house.  This would include things like shed, fences, sidewalks, etc.

Loss of use - This coverage will help people maintain a normal lifestyle while their home is being fixed.  An example of this would be if there was a fire and you couldn’t use your home, this coverage would help with living expenses for that time.

Mobile homes - You may have a hard time finding this coverage since few companies will offer it, but if you are living permanently in a mobile home, this will cover you as residential insurance would.

Building code upgrade - This coverage will help you cover the costs of any improvements that are required, by law, for you to have done.

You should always check your policy and make sure that you have the coverage you need for you particular situation.  Check prices of other policies on a regular basis as well, just to make sure you aren’t being over-charged.