Are You an Underinsured Homeowner?
When buying a new home, it’s hard to imagine that your investment might be completely destroyed by a flood, fire, or other natural disasters. Unfortunately, this leads to most homeowners being underinsured, purchasing only the minimum amount required. Too often, homeowners realize that they need guaranteed replacement cost coverage only after it’s too late.
The Costs of Rebuilding
Traditional property insurance generally covers the actual cash value of your home. While it’s usually the least expensive policy to purchase, it won’t cover the expensive costs of rebuilding a new home. When disaster strikes, these policies may only pay the amount of the mortgage. According to https://www.owensgroup.com/, that might be only 80 to 90 percent of the home’s actual value – even less If your home has appreciated since the purchase.
The costs of building a new home from the ground up will far exceed the amount of money you’ll get back from these types of policies. Supplies and labor costs simply aren’t covered by traditional homeowner’s policies.
Guaranteed Replacement Cost
Guaranteed replacement cost insurance is designed to help protect homeowners from being underinsured in the event of a catastrophe. This type of insurance pays the full cost of replacing the home, even if it’s beyond the policy limits. Helping homeowners avoid a “total loss” situation, this type of policy makes all the difference when you find yourself wondering what to do next.