One of the biggest potential mistakes that homeowners make when it comes to making a decision about home insurance is to only get the basic insurance required by the mortgage lender for the property. Studies show that more than two-thirds of American homes are likely to be under-insured. Talk with your agent at Allsurance Group serving Spartanburg, SC and the surrounding areas to understand your home insurance policy limits and to see if you have adequate home insurance.
Avoiding Under-Insurance Problems
The reason why homes are under-insured when having only the basic insurance required by the mortgage lender is that the only amount insured is the balance remaining on the home loan. This insurance only protects the mortgage lender to make sure the home loan balance is paid off if the home is totally destroyed. Obviously, this does little to help the homeowner if their home is destroyed. Any down payment or difference between the value of the home and the remaining loan amount is completely lost causing a huge financial problem for the homeowner.
Replacement Cost Home Insurance
A much better thing to have for the homeowner’s protection is a home insurance policy that covers the replacement cost value of the home. This type of insurance allows a home to be rebuilt to a similar condition after it has been completely destroyed. Also, talk with your agent about flood insurance because this coverage is an additional policy that is separate insurance from home insurance.
Each year, take the time to get an insurance review and explain to your insurance agent anything that has changed during the past year. For example, if you make a renovation on your home, tell the agent about the work that was done and how much you spent on the construction project. The agent will also use a cost-increase factor to recalculate replacement cost because the cost of materials and labor usually increases each year.
When you have replacement cost home insurance, you can rest easy and know that if there is a major disaster your home can be rebuilt without extensive money coming out-of-pocket. Consult with your agent at Allsurance Group in Spartanburg, SC to get a quote for home insurance or to have a home insurance review to make sure your coverage is adequate.