Is Your Home Insured at the Correct Value?

Having the right insurance for your home is a basic necessity of homeownership, yet many homes in the United States are underinsured. In the event of a total loss, the homeowner may find that they must pay a significant amount of money toward rebuilding expenses.

While many home insurance policies provide replacement cost coverage, it’s crucial to insure the full up-to-date value of your home.

What Does a Typical Home Insurance Policy Cover?

There are several coverage types included with a typical homeowners insurance policy, including the following:

• Coverage A may help cover damage to the house. The face amount of the policy is the maximum amount of money the insurer will pay if your home is destroyed in a covered event. This amount should be periodically updated.
• Coverage B may help cover damage to other structures on your property, including sheds, detached garages, decks and fences.
• Coverage C may help cover damage to or loss of personal property, up to the policy’s limit.
• Coverage D may help cover additional living expenses if you must temporarily relocate to allow for covered repairs to your home, up to the policy’s limit.
• Coverage E may help provide financial protection from third-party claims of bodily injury or property damage for which you or your family members that live with you are liable.
• Coverage F may help cover third-party claims of medical expenses resulting from injuries that occur at your home, regardless of fault. .

Depending on your situation, your agent may recommend that you add policies and riders to help provide coverage for damage caused by other events such as flooding or earthquakes. They may also advise you to purchase guaranteed replacement cost coverage when available.

How Much Home Insurance Coverage Do You Need?

Having the right types and amounts of coverage can help protect your financial stability by reducing out-of-pocket costs after an accident or incident if you must make a homeowners insurance claim. An experienced agent can help determine whether you have appropriate homeowners insurance coverage.

For many homeowners, it’s crucial to periodically update the cost-to-replace estimate included with a home insurance policy. This coverage, detailed under “Coverage A,” may include an inflation guard that automatically adjusts the insured value of your house based on a formula that considers inflation. In some cases, those adjusted values must be corrected to reflect the real-world price of potentially replacing your home.

Contact Us

Contact Wanda Gardner at Williams Insurance Agency in Lancaster, South Carolina, to review your home insurance policy and evaluate your options for updating your home’s value to increase your coverage.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.