When you bought your homeowners insurance policy, you had to decide whether you wanted actual cash value or replacement cost coverage. If you didn’t want to face a reduced reimbursement because your personal property has depreciated in value since you bought your policy, you likely chose replacement cost coverage. This type of protection will cover the cost of replacing any damaged property with new property that’s of the same quality. It will cover your new couch and TV and ensure you can build your house with the same type and quality of materials.
Replacement cost isn’t the same as market value, and if you’re just carrying your home’s market value’s worth of replacement cost coverage you could get into trouble. That’s because the amount for which you could sell your home is likely not the same as the cost of rebuilding your home for the ground up.
When buying replacement cost coverage, you should meet with your insurance agent. Together, figure out the cost of permits, architectural services, labor, licensing, etc. Also, take into account how much your home materials might appreciate in cost over time and determine if there will be new building codes with which you’ll have to comply (that can make rebuilding cost more). With this information, you’ll be able to choose the right amount of replacement cost coverage!
You shouldn’t have to figure out replacement cost coverage all by yourself. Your agent should help! To sit down or get on the phone with an insurance expert who can make sure you understand exactly what you’re getting when you carry replacement cost insurance, contact Lou Aggetta Insurance Services. Our goal is to serve people in Pleasant Hill and the surrounding California area with not just the right policy to completely protect them from financial burden after a disaster.