I'm back, and I finally got my technical glitches worked out. I'm making progress in the online real estate class. It's actually fun to be working on the real estate broker license.
I know it's not very exciting, but today I really wanted to talk about home insurance. Everybody who owns a home needs insurance to protect them from unexpected events. I think it seems boring because it's hard to understand and remember what is covered. If I explain even just one component, it makes it easier for me to understand.
To start, here's one of my favorite websites, "How Stuff Works," covering homeowners insurance in much greater detail. Another place for information is Home Insurance Quotes.
In a brief explanation, homeowner's insurance is insurance that helps you if something bad happens to your home. I want to focus on a situation where you have a home and something BIG destroys it, like a fire. When that happens, you still need a place to live. You can file an insurance claim and you will get financial help in rebuilding your home, living expenses while it is being rebuilt, and replacing your furniture, dishes, and any personal items.
When you are purchasing your homeowner's insurance, you will need to decide what kind of coverage you need. There are different kinds of coverage. The original contract price of the house is not accurate because you don’t need to insure the land that can't be destroyed. The current market value of the house may not be accurate because the house may be overvalued or undervalued by sellers and buyers.
You could get the actual cash value of the property , which includes the original cost of building less the depreciation and amounts to what your old stuff is worth today. But there may be newer, better building techniques or materials. Rebuilding a house similar to yours at today’s costs could be more expensive than the coverage you would get insuring at actual cash value.
If you know you want a house similar to what you have, but you want it created at today’s building standards & costs, you will want to insure the house for the REPLACEMENT COST, or what it would cost to get you new stuff.
Generally, most people are happier with homes insured at replacement cost rather than actual cash value. If everything got destroyed, they would be able to get their lives back to a more familiar style of living. However, it does cost more to insure at replacement cost rather than actual cash value. It is good to find out what your homeowner’s insurance covers if your house was ever destroyed.
