Over the past 5 years, many of our insureds have seen the market value of their home decrease significantly so we aren't surprised when they call with the request to reduce their coverage to follow the reduced market value of their property.
Market value is what a buyer is willing to pay for your home. This value is based on location, age of the dwelling, location of amenities such as good schools, shopping, entertainment and the commute time/distance to places of employment.
While these factors can increase the value or in some instances decrease the value of a home, none of these factors determine the replacement cost. Your insurance policy is based on replacement cost.
In most cases, the market value of your home does not reflect the cost of replacement. With the rising cost of construction materials and associated labor, the replacement cost of homes from a total loss will most likely be much higher than their market value. As the cost of petroleum continues to rise as well as lumber, the products made out of those commodities also rise which causes the price to increase to replace the structure.
Living in Florida, we are also faced with natural disasters in the form of hurricanes. Shortages in materials after a hurricane or any other natural disaster where many homes have been affected cause prices to increase.
As insurance professionals we explain to our clients the difference between market value and replacement cost and with their help, we determine what the replacement cost will be for their home based on Replacement Cost Estimators (RCE).
Companies such as MSB and ISO have developed detailed replacement cost estimating tools to help insurance professionals and our clients determine what is a reasonable estimate of what it would cost to replace their home.
It is important to realize that the replacement cost of your home can change dramatically from year to year if a significant event such as a hurricane occurred or you have made any changes to your home such as an addition.
If it has been several years since the policy has been put in force, before your renewal, take 15 minutes to complete the RCE with your agent as well as taking time to review your other coverages. The service is free and can prevent further stress if a claim arises. Just like you, we don't want you to be under insured.
With your input, the RCE completed with your agent is the best tool in computing the replacement value of your home.
Friday, March 30, 2012
Friday, March 23, 2012
Take A Quiz!
As a lifelong insurance agent, I have fielded many questions about what is covered under the typical auto, health or homeowners policy. Unfortunately, these questions are often asked AFTER a catastrophic event or when a claim needs to be made. Sometimes our insured is surprised to find out that what they thought was covered was indeed not.
At our agency, we often find ourselves reminding our clients that information that they gathered from the web may not apply to our state and to our policies. When reading the various articles about saving money on insurance, we suggest talking with your agent too.
Maybe you have had changes in income, size of family, or added an addition to your current home. Without sharing this with your agent, you may find yourself under-insured or worse, not insured at all.
As quoted by Kiplinger:
You buy insurance to protect your finances from life's surprises. But unless you know the finer points of your policies, you could be left with another surprise -- no coverage where you thought you had it.
Take a moment to test your knowledge about your insurance policy by taking the quiz on the Kiplinger site: kiplinger.com. Once on their webpage, scroll to the insurance tab, then to quizzes on the left side.
Even this simple quiz makes assumptions, such as that you are a homeowner or that you have a basement. Each policy, each state may or may not automatically have certain coverages. As I stated earlier, call your agent to confirm exactly what your policy provisions provide.
If you think you need to adjust your policy, call us! We'll be glad to help.
At our agency, we often find ourselves reminding our clients that information that they gathered from the web may not apply to our state and to our policies. When reading the various articles about saving money on insurance, we suggest talking with your agent too.
Maybe you have had changes in income, size of family, or added an addition to your current home. Without sharing this with your agent, you may find yourself under-insured or worse, not insured at all.
As quoted by Kiplinger:
You buy insurance to protect your finances from life's surprises. But unless you know the finer points of your policies, you could be left with another surprise -- no coverage where you thought you had it.
Take a moment to test your knowledge about your insurance policy by taking the quiz on the Kiplinger site: kiplinger.com. Once on their webpage, scroll to the insurance tab, then to quizzes on the left side.
Even this simple quiz makes assumptions, such as that you are a homeowner or that you have a basement. Each policy, each state may or may not automatically have certain coverages. As I stated earlier, call your agent to confirm exactly what your policy provisions provide.
If you think you need to adjust your policy, call us! We'll be glad to help.
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