When you insure your home, you should insure your home for the total amount it would cost to rebuild your home if it were destroyed. It seems obvious but do not include the value of the land on which your home is built in this value. If you don’t have sufficient insurance, your insurance company may only pay a portion of the cost of replacing or repairing damaged items.
There are three ways to insure the structure of your home:
1. Replacement Cost: Insurance that pays the policyholder the cost of replacing the damaged property without deduction for depreciation, but limited to a maximum dollar amount.
2. Guaranteed Replacement Cost: Insurance that pays the full cost of replacing damaged property, without a deduction for depreciation and without a dollar limit. This coverage is not available in all states and some companies limit the coverage to 120 percent of the cost of rebuilding your home. This gives you protection against such things as a sudden increase in construction costs due to a shortage of building materials.
3. Actual Cash Value: Insurance under which the policyholder receives an amount equal to the replacement value of damaged property minus an allowance for depreciation. Unless a homeowners policy specifies that property is covered for its replacement value, the coverage is for actual cash value.
For a quick estimate of the amount to rebuild your home, multiply the local building costs per square foot by the total square footage of your house. To find out the building rates in your area, give us a call or consult a local real estate appraiser.
Factors that will determine the cost to rebuild your home:
¢ local construction costs
¢ the square footage of the structure
¢ the type of exterior wall construction — frame, masonry (brick or stone) or veneer
¢ the style of the house (ranch, colonial)
¢ the number of bathrooms and other rooms
¢ the type of roof
¢ attached garages, fireplaces, exterior trim and other special features like arched windows.
Also be sure to check the value of your insurance policy against rising local building costs each year. Ask your insurance agent or company representative about adding an “INFLATION GUARD CLAUSE” to your policy. This automatically adjusts the dwelling limit when you renew your policy to reflect current construction costs in your area. Also, be sure to increase the limit of your policy if you make improvements or additions to your house.
Tips to lower your insurance costs:
1. Shop for the best deal. Get at least three quotes. See if your state department of insurance has any price comparisons available. But don’t just look at prices. Evaluate which companies provide the best customer service and are readily available to answer your questions.
2. Raise your deductible. The higher your deductible, the less premium you’ll have to pay. By raising your deductible from $500 deductible to $1000, you may save as much as 25 percent.
3. Buy your home and automobile policies from the same insurer. Some companies will reduce your premium up to 15 percent if you have at least two policies with them.
4. Secure your home. Some companies offer a modest discount, usually at least 5 percent, for installing smoke detectors, burglar alarms and dead-bolt locks. Some insurers will also offer a discount if you install a sprinkler system and a fire and burglar alarm that rings at the police, fire or other monitoring stations. Before undertaking such efforts you’ll want to research the costs involved, and whether you’d be saving on your premiums.
5. Reduce the odds of being affected by a disaster. Make your home more resistant to disasters – you might be able to save by adding storm shutters and shatter-proof glass or reinforcing your roof. If you live in an older home, you should consider modernizing your heating, plumbing and electrical systems to reduce the risks of water and fire damage.
6. Stay put. Many companies offer discounts for longer-term customers – sometimes up to 10 percent if you’ve had your policy through the company for more than six years. Be sure to compare prices against other companies once in awhile.
7. Inquire about discounts. Ask your insurance provider about all potential discounts. For example, some offer discounts to those 55 and older.
8. Investigate group coverage. You may be able to get a group coverage plan through your employer, a professional or business group, an alumni groups or other association of which you are a member. See if these group rates offer a better deal than what you have.
9. Review your policy and the value of your possessions. If you sold that pair of diamond earrings or other valuable for which you have a floater policy – additional coverage for items not covered by a standard homeowners policy – be sure you’re not paying for the extra insurance.
10. See if there’s a government-backed insurance plan. In some high-risk areas, such as coasts, federal or state government may back plans to lower rates. Ask your agent.
If you, or someone you know is considering Buying or Selling a Home in Columbus, Ohio please give us a call and we’d be happy to assist you!
The Opland Group Specializes in Real Estate Sales, Luxury Home Sales, Short Sales in; Bexley 43209 Columbus 43201 43206 43214 43215 Delaware 43015 Dublin 43016 43017 Gahanna 43219 43230 Grandview Heights 43212 Hilliard 43026 Lewis Center 43035 Marysville 43040 43041 New Albany 43054 Pickerington 43147 Powell 43065 Upper Arlington 43220 43221 Westerville 43081 43082 Worthington 43235
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I did not know that the type of roof determines the cost to rebuild the house! I am getting a new house and before I insure it I’d like to get as much information as possible. Thanks for the tips!
The Business Owners Policy, otherwise known as BOP, may well be the key to protecting any small business. Made up of a few forms of coverage that each are usually acquired on their own, the bundled plan for small commercial enterprises offers business discounted premiums as they gain from better insurance coverage.
What does the standard Business Owners Policy provide? This commercial policy usually consists of:
• General Liability Coverage
Commercial liability insurance helps a business owner if a customer is injured at the property and sues for his medical care. Coverage extends to hospital and doctor costs, as well as defense costs. It can also benefit the business if there is ‘advertising injury’ related to claims such as copyright infringement, libel and defamation.
I appreciate what you said about staying put with your insurance company. I didn’t know that some companies offered discounts if you’ve had a policy for an extended period of time. This definitely changes some of our plans, but I think that it will be worth it.
I really liked your tip to raise your deductible so you can save up to 25 percent. I am looking for ways to save on my homeowners insurance. I will be sure to contact my insurer to request a higher deductible, so I can save money.
I really liked your tip to buy your car insurance and home insurance from the same insurer to qualify for better prices. I am moving into a new home, and I wasn’t sure if I should find a different insurer for my home than everything else. I will be sure to get my home owners insurance from the same people who I have my car insurance from.
I really liked your tip to raise your deductible to lower your insurance costs. I am looking into getting my home insurance cost lowered, so I will have more money for other things. I will be sure to call my insurance company to ask if I can raise the deductible.
Since I will be a new homeowner in February, it would be a good idea to start looking at insurance. Now as you said, I would want to find a policy that fits my needs. I’d want to go with something that included the three types of insurance that you listed. You never know what could happen to your home so with something like this, I think it would be better to have more coverage and not need it, than not enough coverage and need it.
Homeowners insurance is tricky. I have been looking for a great deal for a while now. I didn’t’ know that some companies will reduce your premium up to 15% if you have several policies with them. That is really nice and could be super beneficial. I will have to shop around for a company that could offer both of those policies if it will give me a deal.
My wife and I want to buy a home early next year, so thanks for these insurance tips. I like your point about checking the value of your insurance policy against rising building costs each year. I will be sure to do this so I can adjust the dwelling limit down the road.
I didn’t know that you could get group coverage through your employer. I just started a new job and I wanted to know what kind of insurance options I can get through work. Your article was really helpful in getting the home insurance info I needed.
Thank you for explaining that staying put can help you to get discounts. I didn’t realize that this was something that your home insurance company offered to you. It’s something that I’ll be looking into and discussing with my husband so that we can start looking into this.
You’ve got great home insurance tips here. I love how you said that buying home and car insurance from the same insurer is a good way to save money. My wife and I will have to look at our options for bundling those! We’d love to save money.