Home insurance protects one of your biggest and most important investments, the roof over your head. It not only protects the interior and exterior of your home but also your possessions from damage, theft, or loss. However, you may find yourself overburdened with expensive repair costs and stalling every renovation project if you do not get adequate homeowner’s insurance coverage.
What to Consider when Buying Homeowners Insurance?
A standard homeowners insurance provides dwelling coverage, which covers the repair and rebuilding cost of the house’s interior and exterior in case of damage because of a fire, or any other covered natural disaster. It also covers clothes, furniture, electronic items, and other personal possessions destroyed in a covered natural disaster.
Other insurance coverages include personal liability, covering the medical expenses of those harmed on your property. So if your dog bites your neighbor, you need not worry, as your homeowner’s insurance policy protects you from a potential lawsuit and ensuing medical expenses.
Home insurance is customizable to suit your exact needs and requirements. If you want, you can even get off-premises coverage for your possessions and file a claim for a lost jewelry ring that you lost in the park. But let’s focus on the vital aspect first, which is the insurance coverage level.
Home Insurance Coverage Levels
Your coverage levels determine precisely how much your insurer will pay you for your home. There are three main coverage levels you can choose from.
Actual Cash Value Policy
Here, the insurer will pay the homeowner the house’s value and that of the covered personal belongings after deducting depreciation value. Put simply, the insurer will pay you what the home and your belongings are worth in the market at the moment and not what you paid for them.
Replacement Value Policy
Here the insurer will pay you the house’s value and your possessions without deduction of depreciation, allowing you to rebuild your home to its original value. Put simply; you get the exact amount you paid for it.
Extended Replacement Cost Policy
The extended replacement value is the most extensive form of coverage available. It covers the cost of repairs or rebuilding the house, even if it means going over the policy limit. Of course, there is a limit to how much you can exceed your insurance limit, which is typically around 20 to 25%.
How do Renovations and Rebuilds Impact Home Insurance?
The cost of homeowners insurance depends mostly on the expected cost of repairing or rebuilding the home if disaster strikes. If you decide to renovate or remodel the house, owning to which the expected cost to rebuild the house rises, your current home insurance coverage will become inadequate. So yes, renovations and rebuilds impact home insurance.
Standard home insurance policies do cover particular renovations. Some insurance providers also provide incentives such as lower premiums for certain renovations such as security upgrades, installation of energy-efficient fixtures, installation of solar systems, etc.
Before you undertake a renovation project, contact your insurance provider to discuss the best way forward. Suppose you are covering an external covered space such as your shed and garage into a liveable space. In that case, you definitely want to contact your insurer to discuss how it will affect the house’s value and, subsequently, your home insurance. You should also check with your contractor and ensure they have liability coverage in case of an accident on site.
Sounds like too much to handle? Contact Renee Jackson Insurance Agency. We will allocate an independent agent who can help you find the best insurance policy providing optimal homeowners insurance coverage for your present and future requirements.