How Is My Replacement Cost On My Home Created?

It starts with a few questions : such as, square footage of the house, type of siding, how many stories, attached or detached garage, and so on.

We then take that information and input it into our MSB software which then comes back with how much it would cost to rebuild the house from the ground up, including debris removal, as if it was a total loss.

Sadly, the cost of building materials increase each year so that’s why you might see your Replacement Cost (aka RC) higher than what you might expect.

A popular misconception is that the market value of your home plays a part in the homes Replacement Cost. The market value only says how much the house is WORTH, where as Replacement Cost states how much it costs to REBUILD.

If you look at your policy you will see your Replacement Cost Coverage Amount under Coverage A.

Homeowner E & F Coverages

This is the liability section of your homeowners policy.

Coverage E : is your Personal Liability. So lets say someone comes over and slips on some ice and breaks their back, they could sue you. This is where your Personal Liability comes into play. How much liability should you purchase with your policy you ask? As much as you can afford.

Coverage F : is for Medical Payments. So with the same scenario as up top this coverage would also come into play. So if the individual slips and falls you can make a claim to have your insurance pay the first $1,000, $5,000, or whatever you coverage limit is of the individuals medical bills as a good faith gesture to prevent him from wanting to file a law suit against you.

*All above are subject to deductible.

If you have any questions please feel free to post a comment and ask away.

Homeowner A-D Coverages

Coverage A : As discussed in the Replacement Cost post, coverage A determines what your house is covered for covered damages to it.

Coverage B : is for Other Structures. So it could be a pole barn, shed, detached garage, etc. Coverage B is created by taking 10% of Coverage A. So if Coverage A is $100,000 then Coverage B would automatically be $10,000.

Coverage C : is for Personal Property. This would be your contents. Coverage C is created by taking 50% of Coverage A. So if Coverage A is $100,000 then Coverage C would be $50,000.

Coverage D : is for Loss of Use. Loss of Use is if you have a loss caused by a covered peril to where you cannot reside in your house until the repairs are finished, your insurance will pay for you to live elsewhere for the time being up to Coverage D’s limit. Coverage D is created by taking 25% of Coverage A. So if Coverage A is $100,000 then Coverage D would be $25,000

* All of the above are subject to your deductible.

If you have any questions please feel to comment and ask away.

3 Keys to Having ‘Peace-of-Mind’ Homeowners Coverage

Do you want the type of homeowners coverage that gives you peace of mind so that when you lie your head down to go to bed you’re not worrying whether you’re fully covered or not? Well here are three keys to insure that you can have that:

1. Be Honest With Your Agent – always tell your insurance agent the truth. You may think by “fibbing” or telling a “white lie” to save a little bit in premium dollars won’t hurt, but that’s where you’d be wrong. This could cause you to have possible gaps in your homeowners coverage. Always have full disclosure with your agent. You wouldn’t go to the doctor and not tell him all your symptoms would you? Of course not, because he might misdiagnose you! It’s the same way with your insurance, ALWAYS BE HONEST.

2. Ask Questions – if you’re ever unsure of anything ask you agent. All through out high school so many of my teachers said, “There’s no such thing as a stupid question” and you know what? They were right! Never feel embarrassed to ask a question, please ask away!

3. Pay Your Bill When It’s Due – rather than waiting until last minute to pay your bill and hope it gets to the company on time, just pay it when it’s due and you’ll know your covered. Simple.

So there you have 3 Keys to Have great peace of mind when it comes to your homeowners coverage!