Replacement Cost & Home Insurance

Burnt house Question:

Why do I have to carry so much insurance on my home?

Answer:

This is a great question, and one that our customers ask frequently.

For one thing, we believe you should have an amount of insurance that is sufficient to rebuild your home – probably your largest investment – in the event it is totally destroyed by a fire or tornado.

In addition, your policy contains what is called an insurance-to-value provision.  This is essentially an agreement between you and the insurance company.  In exchange for your agreement to insure your home for at least a specified percentage of its replacement value, the company agrees to issue the policy for a lower premium than it would charge for a policy without this provision.  After a loss – even a small loss – if the amount of insurance on your home isn’t sufficient to satisfy your part of the agreement, then the insurance company can reduce the amount it would normally pay.

While it is your responsibility to establish the value of your property and select the amount of insurance for your policy, we can help with that decision and explain what you can do to avoid a loss penalty.

Swingle, Collins & Associates specializes in individual replacement cost and homeowners insurance coverage The descriptions of coverages listed on this website are brief and subject to the provisions, limitations, and exclusions that can only be expressed in your policy and related endorsements. For additional information of how Swingle, Collins & Associates can assist in meeting your coverage needs for personal homeowners insurance please contact your dedicated risk manager to discuss the benefits and services of homeowners insurance coverage.

The information contained on this page is provided for informational and educational purposes only. It contains general information on insurance issues and may not reflect the most current developments in insurance coverage and is unlikely to apply in all factual scenarios. The information does not include all the terms, coverages, exclusions, limitations or conditions that may be contained in the actual insurance contract language. The policies themselves must be read for those details. Sample policy forms will be made available upon reasonable request.