Hi, I've been asked to choose home insurance for a replacement value. What does that mean? JColeman
Total Comments: 5
Posted: Wed Sep 02, 2009 09:56 am Post Subject:
Hi,
You can save a lot if you'd pick the depreciated value coverage. On the other hand, if you've had to file a claim on contents insurance you'll notice the big difference.
If you'd need to file a contents claim, you'd receive much lesser money in case you've chosen depreciated value coverage than if you'd have chosen a replacement value coverage.
Steven
Posted: Thu Sep 03, 2009 08:00 am Post Subject:
Under circumstances when you have replacement value coverage, the compensation for your damages will comprise of a combination of costs that you initially paid after deducting a percentage upon the age of each damaged item.
If you get your contents covered for a replacement coverage value, then you will actually get paid for replacing the contents in case they get damaged due to the covered event. Roddick
Posted: Thu Sep 03, 2009 03:16 pm Post Subject:
Replacement value means that you would be insuring your home based upon how much it cost to replace your home at the time of a loss.
Companys also offer actual cash value which means that loss will be settled based upon the value of the home less depreciation.
I always advise my clients to insure your home based upon replacement cost so that if you have a loss you won't have to worry about coming out of pocket because you did not have sufficient coverage.
It is true that sometimes it is less expensive to carry actual value then replacement value but it is worth it if you have a loss to carry the replacement value.
Keep in mind that insurance is in place to make sure you are indemnified in the event of a loss.
Posted: Fri Sep 04, 2009 07:43 am Post Subject:
Hi, I guess I'd heard that a home depreciates faster with time. If that's true, then I'm sure the worth of the home would fall faster and the actual cash value would decrease accordingly.
So, if we're to cope with losses in the long run, then the out-of-pocket thing could even be much more than what we can think of right now. That's quite a big risk! Pinkfloydfan
Posted: Fri Sep 04, 2009 01:20 pm Post Subject:
Keep in mind that your homeowners insurance should be based upon the amount it cost to rebuild the home and not the market value or worth. One year your home may be valued at $335,000 including the land and 2 years later it could be $295,000 and 4 years later it could be $350,000.
It is hard to gage how much you should cover your home for when using actual cash value. Being that our economy is experiencing some challenges your property value may be brought down by foreclosures in the neighborhood but that does not mean it will cost less to repair your home.
Go with the replacement cost and save yourself the financial hardship and headache. :-)
Posted: Wed Sep 02, 2009 09:56 am Post Subject:
Hi,
You can save a lot if you'd pick the depreciated value coverage. On the other hand, if you've had to file a claim on contents insurance you'll notice the big difference.
If you'd need to file a contents claim, you'd receive much lesser money in case you've chosen depreciated value coverage than if you'd have chosen a replacement value coverage.
Steven
Posted: Thu Sep 03, 2009 08:00 am Post Subject:
Under circumstances when you have replacement value coverage, the compensation for your damages will comprise of a combination of costs that you initially paid after deducting a percentage upon the age of each damaged item.
If you get your contents covered for a replacement coverage value, then you will actually get paid for replacing the contents in case they get damaged due to the covered event. Roddick
Posted: Thu Sep 03, 2009 03:16 pm Post Subject:
Replacement value means that you would be insuring your home based upon how much it cost to replace your home at the time of a loss.
Companys also offer actual cash value which means that loss will be settled based upon the value of the home less depreciation.
I always advise my clients to insure your home based upon replacement cost so that if you have a loss you won't have to worry about coming out of pocket because you did not have sufficient coverage.
It is true that sometimes it is less expensive to carry actual value then replacement value but it is worth it if you have a loss to carry the replacement value.
Keep in mind that insurance is in place to make sure you are indemnified in the event of a loss.
Posted: Fri Sep 04, 2009 07:43 am Post Subject:
Hi, I guess I'd heard that a home depreciates faster with time. If that's true, then I'm sure the worth of the home would fall faster and the actual cash value would decrease accordingly.
So, if we're to cope with losses in the long run, then the out-of-pocket thing could even be much more than what we can think of right now. That's quite a big risk! Pinkfloydfan
Posted: Fri Sep 04, 2009 01:20 pm Post Subject:
Keep in mind that your homeowners insurance should be based upon the amount it cost to rebuild the home and not the market value or worth. One year your home may be valued at $335,000 including the land and 2 years later it could be $295,000 and 4 years later it could be $350,000.
It is hard to gage how much you should cover your home for when using actual cash value. Being that our economy is experiencing some challenges your property value may be brought down by foreclosures in the neighborhood but that does not mean it will cost less to repair your home.
Go with the replacement cost and save yourself the financial hardship and headache. :-)
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