Building a Better Homeowners Insurance Policy
June 6, 2014Your basic homeowners insurance policy, while the best dwelling coverage available, can be improved upon by adding some very valuable and affordable endorsements. Here are a few endorsements to consider in order to build a better homeowners insurance policy:
1. Replacement Cost Contents
Your policy will automatically cover your personal property for actual cash value. This means of valuation does take into consideration depreciation. The simple addition of this endorsement will provide you with the replacement cost of your contents.
For example, a television is expected to last 10 years. If you have a 5-year-old set that would cost $ 800.00 to replace, the actual cash value is only $400.00. We recommend this be added to all Homeowners and Renters insurance policies.
2. Extended Replacement Cost on Dwelling
Most homeowners’ policies are written at 100% replacement cost. This figure is determined based on the information available to the agent at the time the policy is written. Most improvements and upgrades increase the replacement cost of the home and agents are generally not told about them.
To address this possible difference you can add an additional percentage of Coverage A (dwelling) to your policy. This is another endorsement that we highly recommend.
3. Backup of Water or Sewer
Does homeowners insurance cover damage to your home? Sometimes, but not if it’s water or sewer backup and it’s not endorsed on your policy. Backup of sewer and drain lines, as well as sump pump failure, are excluded on the unendorsed Homeowners policy. If you have a finished basement or use it for storage you should not go without this coverage.
The civil engineering research council estimates a 3% annual increase in incidents of sewer backup due to the age of our nation’s sewer systems and the age of the homes they service. Keep in mind that many of your home’s most expensive systems are housed in the basement.
4. Law and Ordinance
Law and Ordinance is an endorsement that we recommend for older homes. For example, suppose that a portion of your home is damaged by fire. Your policy is going to cover the replacement cost of that portion of your home, but not the portion that current ordinances and laws may require you to replace in order to comply with current codes.
The cost to do so will be an out-of-pocket expense for you. If you know that your older home does not currently comply, add this coverage to your policy without hesitation.
It is important to know and understand the policy that is protecting your most valuable asset. Don’t hesitate to call us at 717-665-2283 or 1-800-537-6880, we would be happy to work with you to provide coverage to fully fit your needs.
Disclaimer: Information and claims presented in this content are meant for informative, illustrative purposes and should not be considered legally binding.