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Own a home? Here are two policy options you should be aware of



If you have a homeowner’s policy, you probably expect it to cover all the costs of rebuilding your home should it be damaged or destroyed by a covered hazard. But are you sure you have enough coverage? Read about two common situations you may not be aware of – and the affordable options that can help you calm down.

Homeowners insurance

Extended housing coverage

Because rebuilding costs differ from market value, your current homeowner’s policy may not accurately reflect the actual cost of rebuilding your home. Extended housing protection helps you rebuild if construction costs change and become more than your current insurance limits.

To illustrate this concept, consider this real-world scenario. Your home is currently insured for 100% of the replacement cost, with the cost based on the value of your home when the insurance was originally written. But a wildfire sweeps through your area and destroys your home along with hundreds of others nearby. Due to the high demand caused by the natural disaster, building materials and labor costs increase by 20% in your area. So your $ 200,000 home will now cost $ 240,000 to rebuild. If you had 20% extended housing coverage, you would receive $ 240,000. Without it, you get $ 200,000 and have to make up the difference out of pocket or settle for a smaller house than you had in the beginning.

Building ordinance or legal coverage

If your home is damaged by a covered loss and needs to be rebuilt or repaired, you are obliged to build according to current building regulations. And as codes have become more rigorous over the last 20 years, this can mean much higher costs to rebuild than you expect. This is where a building ordinance policy, or team coverage, comes into force – and it can save thousands of dollars.

Again, let’s take the example above and assume you have a $ 200,000 homeowners policy. With a 10% building ordinance policy, you would receive an additional $ 20,000 to apply the new building standards you must meet. Without this policy option, you will have to pay the difference to get your house to the code.

Extended housing and building ordinances offer valuable protection against gaps in coverage in the event of an unforeseen covered event, and all for an affordable annual premium. To better understand your risks and to protect yourself from a loss that may exceed your insurance limits, contact your Bolder Insurance Advisor.

Article compliments from Safeco Insurance, A Bolder Insurance Partner


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