As experts in property insurance policy interpretation and negotiation, we’ve seen hundreds of different policies. Some insurance policies are better than others when it comes time to filing a claim and getting a fair settlement for your damage. In this article, we share three key tips to buying a property insurance policy, so that you’ll be better equipped when unexpected property damage occurs.
Tip #1: Buy Enough Property Insurance Coverage
Make sure you have enough coverage to avoid a major financial loss if your home is badly damaged or destroyed. Having enough coverage on the structure means the cost to rebuild the dwelling with material of like kind and quality at current construction costs. You should review your policy from time to time to ensure your dwelling coverage does not drop below 80% of replacement cost value, otherwise your insurance provider may pay less on your claim, should you have property damage.
Tip #2: When Possible, Choose Replacement Cost Value over Actual Cash Value
Replacement cost value (RCV) is the amount it would take to repair or rebuild your home, or replace damaged property with materials of similar like kind and quality. Actual cash value (ACV) is the amount it would cost to repair or replace damage to your property after depreciation. Insurance companies may offer coverage at either Replacement Cost Value or Actual Cash Value. If you choose replacement value then you will pay a higher premium, but will pay less out-of-pocket to restore your property and its contents back to whole.
Let’s look at a simple example of Replacement Cost Value versus Actual Cost Value:
Eight years ago you bought a couch for $700. Today it is worth $300 due to age and wear and tear. A new couch costs $1,000. If the couch is destroyed due to a covered event, such as by a hurricane or fire, you would be reimbursed as follows:
Actual Cash Value Reimbursement: $300 minus deductible
Replacement Cost Value: $1,000 minus deductible after showing proof of purchase of a replacement couch
Tip #3: Check the Credibility of Your Insurance Provider
You want to know that your insurance company will be cooperative in paying your claim, should you need to file one.
The National Association of Insurance Commissioners (NAIC) offers reference tools for consumers in each state. On the NAIC website will find links to: a database of licensed insurance agents and enforcements against them, a form for filing an insurance complaint, and market conduct reports of insurer violations.
There you have it! We hope our three tips for buying property insurance coverage will be useful to you.
If you have property damage, call CORE Public Adjusters and we’ll get working on your claim right away. We’ll put our expert knowledge, skills, and negotiation power to work for YOU! Call or text us at (877) 411-2673.