Homeowners Insurance — Terms that make a Difference:
- Actual Cash Value:
This policy pays to replace the home or possessions minus a deduction for depreciation.
- Replacement Cost Value:
This policy pays the cost of rebuilding or repairing the home or replacing possessions without a deduction for depreciation.
- Guaranteed/Extended Replacement Cost:
This policy offers the highest level of protection. A guaranteed replacement cost policy pays whatever it cost to rebuild the home as it was before the loss due to a covered cause, even if it exceeds the policy limit. An extended policy, rather than a guaranteed, pays a certain percentage over the limit to rebuild the home or replace the possessions. Generally it is 20 to 25% more than the limit of the policy.
What Drives Premium Rates:
-
-
- The likelihood a homeowner will file a claim- the insurer’s perceived “risk.” Determining that risk: Home insurance companies give significant consideration to past insurance claims submitted by the homeowner as well as claims related to that property and the homeowners credit.
-
- Claim frequency and severity play a considerable role in determining rates. While insurers are there to pay claims, they’re also in it to make money. Ensuring a home that has had multiple claims in the past 3 to 7 years can bump your home insurance premium into a higher pricing tier.
-
- Replacement cost and accessibility to resources and labor to rebuild our other major drivers of annual premiums.
-
- How far a home as from the nearest fire station, fire hydrant, or source of water for putting out fires.
-
- A homes proximity to the coast and its relation to high crime areas our other pricing considerations.
-
- Finally; pricing in eligibility for home insurance can also vary depending on insurers appetite for certain building construction, roof type, condition or age of the home, heating type, swimming pool, trampoline, security systems and more.
-
-
