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When comparing homeowners insurance quotes, there are
several factors that need to be addressed:

How much is your dwelling (the house itself, exclusive of
the contents) insured for?

Can you rebuild your home for this amount? With building costs continuing to skyrocket on a nationwide basis, a house that was insured for $200,000 five years ago may be underinsured today because it would cost more than $200,000 to rebuild it. Just look in your local newspaper and think back. It wasn’t that long ago that the houses down the street were selling for a whole lot less than they are today.

Do you have computers, photo equipment, furs, silver,
jewelry, audio equipment, etc?

All of these items have limited coverage on most policies. For example, some policies only cover $2000 in unscheduled jewelry (note: unscheduled means that you didn’t supply an appraisal for each piece and list it separately on the policy for an additional premium per thousand dollars in coverage). Just as an example, say that you own two expensive cameras, a computer system and some jewelry, the total value of which is around $8000. if you only have $2000 in unscheduled coverage, then you will not be able to replace everything that was lost either in a fire or robbery. Remember, all policies have a limit on personal computers.

How much liability coverage is enough?

This is a relative question and will differ for each person. The difference between the minimum a company offers and the maximum usually isn’t a huge difference in premium. There are two common arguments with regard to liability. One argument is that if you have $500,000 or even $1,000,000 in coverage, the attorneys are more likely to bring an even larger suite in the event of a claim. Another perspective is that the claimant will only get the maximum that the policy will pay, suggesting that if all you have is $200,000, then that’s all that will be awarded in a claim situation. We suggest that you weigh the options and even consult with an attorney before making your decision. Don’t base your entire decision on whether you save $25 by taking $100,000 in coverage instead of $300,000. Let your agent help you with this one.

Is replacement cost coverage on the dwelling
and personal property necessary?

Without the coverage, you are stuck with the limits the policy offers. Here’s an example: Lets say (for the sake of argument) that you did not choose personal property replacement cost coverage because it was $70 more in premium annually. Now, the house burns to the ground and you were out of work when it happened. Without guaranteed replacement cost coverage on your contents, you will be getting the depreciated value of everything you owned that wasn’t attached to a wall or wasn’t scheduled. So, if your leather living room set as $2100 and is 6 years old, it is likely worth less than 30% of its original value….and that’s what you will be receiving….only $700…and it’s unlikely you can buy a living room set for $700 today. If you think this example is an exaggeration, consider what you have seen at garage sales over the past few years. Furniture depreciates to almost nothing the minute you bring it home. Guaranteed replacement cost coverage on the dwelling requires that you insure it adequately in the first place. You can’t insure a $500,000 home for $90,000 and take the replacement cost coverage for an extra $20. Insurance companies are a lot smarter than that and they have a stipulation regarding you insuring it properly in the first place thereby limiting their risk that they will have to pay more than you have insured the home for.

Compare your current coverage to those proposed by
the agent that provides your quote.

Ask yourself if you are losing any coverages on the policy he or she is quoting. After reviewing any differences, ask if there are any optional coverages you should have that you currently don’t have. Remember….if you don’t ask about possible coverages, you may never know that you are missing a valuable coverage. Don’t buy on price alone.

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