Published on 06/16/2010

Learn everything that you need to know about homeowners insurance.

Do I Have Enough Homeowners Insurance to Rebuild My Home?

Many people who have purchased their homes within the last few years likely do not have enough coverage. In many cases homeowners insurance agents rate dwelling coverage based upon the purchase price of the home. Unfortunately, the value of a home and the purchase price for the home has absolutely nothing to do with the cost of rebuild in the event of a total loss.

In the current home market you can purchase a home for significantly less than it would cost to build that same home from the ground up. The amount of coverage that you should have for dwelling coverage on your homeowners insurance policy should be rated at the current rebuild cost for your specific area. The rebuild cost varies based upon the cost of supplies and the availability of contractors in the area.

Many insurance companies curb this problem of having under-insured homes by supplying agents with rebuild cost calculators. The agent working on the homeowner insurance policy will put in the specific information about the home and the calculator will advise the agent on what the proper amount of dwelling coverage should be. At the same time agents should use their personal knowledge of the area to determine that the proposed amount is high enough.

It is important for you, as a homeowner, not to rely exclusively on the work of your insurance agent. To ensure that you have the proper amount of rebuild coverage on your home it is recommended that you speak with local contractors in your area regarding the average cost per square foot of new construction. They will be able to provide you with the most accurate estimates of the cost to rebuild given the unique characteristics of your home.

What Is Homeowner Content Replacement Cost

Homeowner content replacement cost, also known as, personal property content replacement cost, is an optional endorsement that many homeowners insurance companies in California offer.Personal property replacement will replace the contents of the insured personal property in the event of a loss. Many people are not aware that most standard homeowners packages do not cover the replacement cost of personal property. With the standard personal property coverage, the insurance company will pay the current value of the insured personal property, rather than what it costs to replace it. It may be hard to place a current value on personal property. Personal property is used and will be valued as used property at the time of a claim. Without the content replacement cost coverage, the endorsement you will be paid would is the estimated value to replaced used goods, not new. This difference can be substantial and for the cost of the additional endorsement on your policy it is well worth it. It will be a minimal increase in the premium. If you are involved in a total loss homeowners claim, you want to rest assured that you will have chosen the appropriate homeowners insurance coverage for you and your family and that you are able to replace your personal property.

The Truth About Homeowner Extended Replacement Cost

Many people believe that it is acceptable to under insure the dwelling coverage on their homeowners policy because they have an endorsement for an additional 25% or 50% extended replacement cost. Think again. In California, most homeowners insurance policies will have provisions in them with respect to the extended replacement cost coverage. In order for this coverage to be in place, the insurance company can require that you are insuring your home at least to the rebuilt cost of the home at the time of the policy period. In the event that you are not, your extended replacement cost coverage could be void or you could find yourself in a position of coinsuring your home based upon the percentage of rebuild cost. Many people attempt to keep lower than necessary coverage on their homeowners insurance in order to lower the premium. In the end, it just is not worth it. The different in premium from a properly rated policy to a policy that is underinsured is minimal. If you are looking to ensure that you have a good rate on your homeowners insurance, it is in your best interest to shop your policy with more companies rather than shorting yourself on coverage. For many families, their home is the largest investment that they will ever make. It should be a priority to protect this investment.

Does My Old Heating System Effect My Homeowner Insurance

It is important that you keep an updated heating system in your home. In California, if your heating system is over 25 years old or older, you will be limiting the options that you have for homeowners insurance companies. Many companies will not insure you home if the heating system is older than their requirements. Many insurance companies require that your system is less than 25 or 30 years old. The problem for you as a homeowner is that many of the highest rated and most competitively priced companies have this requirement. With and older heating system in your home, the likelihood of a fire increases significantly. This increases the insurance companies risk when insuring these homes, resulting in higher rates.

Where Not To Save On Your Homeowner Insurance

If you need a more competitive rate on homeowners insurance, you should shop your policy with an independent agent.Do not short yourself on coverage. With access to multiple insurance companies, independent insurance agencies have the ability to shop your policy with some of the highest rated insurance companies servicing the state of California. The last thing that you should do is lower the coverage on your homeowner insurance policy to save money. If you are not able to find a rate that is within your budget you could also increase the deductible on your policy. Many insurance companies offer higher deductible options. The exposure that you would have with a higher deductible would be significantly less than if you were to lower your coverage. If you find that you are still in need of additional savings, shop your auto and homeowner insurance policies together with an independent agent. You will receive a discount on both policies. Are you looking to save money on your homeowners policy? Call one of our experienced agents today to receive a free rate quote and discuss your coverage options. Our agents have saved California homeowners money on their insurance packages, sometimes with even more coverage than their previous, more expensive policy.

High Brush Areas Limit Homeowners Insurance Options

In California, when evaluating a home’s eligibility, one of the reports homeowners insurance companies check is a brush hazard report.Many companies have changed their standards over the recent years due to the large number of losses incurred in fires across the state. Some companies will require that you have at least a 1000 foot clearance around your home from any brush. Recently, with the standards being changed, many homeowners are finding themselves in a position that their insurance company will no longer insure their home based upon their new guidelines regarding brush hazards. Some of these homeowners have been with their current carrier more than 20 years. Insurance companies do not want to be placed in a position that they could potentially suffer large losses as a result of a fire that continues to spread for days and weeks. If your home is located in an area that is considered a high burn area you may find it harder now to find a homeowners insurance company to insure your home.

Proper Homeowner Insurance For A Custom Home

If your home is a custom built home in California, you are likely under insured on your homeowner insurance. All homes are different and the rebuild cost per square foot in your home will vary from home to home based upon the individual characteristics of the home. If your home has exposed beams, vaulted ceilings, high quality appliances, or other important unique qualities, make sure that you discuss this with your agent. Your dwelling coverage on your home will need to be rated higher than other homes that do not have the same custom characteristics. The average cost per square foot to rebuild your home will be significantly higher than a home with standard features. The premium on your homeowners insurance policy will raise proportionately as the dwelling coverage is raised. The bottom line is that if your homeowner insurance coverage is not rated correctly and you have a total loss you will not have enough coverage on your policy to rebuild your home to the same standards that it was prior to the loss. In some areas in California the cost per square foot to rebuild a custom home could be as much as double that of a standard home. Make sure that your agent speaks with you regarding the proper amount of coverage and the unique quality of your home so that you can ensure that in the event of a claim you will have the appropriate coverage that you need.

Where is the Responding Fire Station

In California one of the largest factors in your home owner insurance rate is the distance to the responding fire station.Most insurance companies file their rates with the state of California stating that they will be using an ISO based rating system. ISO is an organization that rates and qualifies fire stations. All areas of the state are given a score, referred to as a protection class. These scores rank from 1-10. The lower the protection call of the community that you live in, the lower rates you can expect to pay for homeowners insurance. In order to be rated at the protection class that ISO has determined for your area, you need to have a responding fire department within 5 miles of your home. For a fire department to be considered the ISO approved fire department it will need to file with ISO for eligibility. For you, as the homeowner, to receive the low protection class rating on your policy the fire department needs to be within 5 miles of your home and it will need to be filed with ISO. If you are in an area that does not have an ISO recognized fire department within 5 miles of your home, then you will be rated at a protection class 10. This is the highest protection class available to be rated at in California. With a protection class 10 rated on your homeowner insurance policy you will not be eligible for many insurance companies to write you policy and will likely pay significantly higher rates than other homes with a lower protection class rating.

Raise Deductible Do Not Lower Coverage

In California you are at a higher risk of a financial loss if you lower your coverage on your homeowners insurance policy rather than raising the deductible.. If you are having trouble finding a homeowner insurance policy that is within your budget, you have the option of raising the deductible on your policy to lower the premium. This is recommended over lowering the coverage on your policy. It will limit the your exposure as a homeowner and will cause a significant decrease in your rates. If you were to carry a policy that does not provide you the protection that you need, then you could find yourself in a position that you are personally exposed to a significant financial loss. You are far better off raising your deductible to keep your rates down because the only increase in exposure is the difference in the deductible.