All homeowners insurance is not alike. Take, for example, "replacement cost coverage." Put simply, this is the dwelling coverage that would allow you to repair or replace your home if it were damaged or destroyed. But, when you sit down to read various home insurers’ policy contracts, you’ll be surprised at how different they are.
For example, a policy containing "full cost replacement coverage" will pay you to rebuild or replace your home in cases of a covered loss, even if the total costs are more then the dollar limit set in your policy. With this coverage, should you lose your home and it costs $600,000 to rebuild, that’s the amount you’ll receive, even if the policy limit is $350,000.
Some insurers have recently added a 120% cap or stop coverage at the policy limits. Some policies also contain coverage for the additional costs of debris removal and building code changes, two of the most common reasons for increases in repair costs.
To be eligible for replacement cost coverage, you must insure your dwelling to its full replacement cost. You are also generally required to notify the company or your agent if you are planning alterations that may increase the value of the insured dwelling or if your dwelling will be vacant for more than 30 days.
To help you calculate full replacement cost for you home, call our office for a free estimate.
--an excerpt from an article from Liaison, by Fireman’s Fund, Summer 1998 Vol.7 No.1.
