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Homeowners Insurance
Your home is probably the most expensive item
that you will ever own. And for most of us, our home is just too large of a dollar amount
to lose. That is why we purchase insurance and in particular, a Homeowners Insurance
policy.
But how should you insure your home? First, insure to 100% of true replacement cost. This
way you can replace your house and contents at today's current construction costs.
Sometimes this is not as easy as it sounds--because if you are not purchasing a new house,
how do you determine the replacement cost? Replacement cost coverage is what I call
"depreciation insurance" because there is no deduction for depreciation.
Insurance companies provide new construction cost guides and talking to local builders is
most helpful. The Cullman County Home Builders Association can be of valuable assistance
to determine today's construction costs. Don't forget to insure your contents or personal
property for replacement cost. Most homeowner policies include from 50-70% of the dwelling
coverage for personal property. Therefore, a $100,000 homeowner will automatically include
$50,000 to $70,000 coverage for contents.
Personal liability coverage is also included. In today's lawsuit society a minimum amount
that should be considered is $100,000 and $300,000 is even better at a very reasonable
increase in premium. Medical payments pay for the medical expenses of guests on your
premises. The recommended range for medical payments coverage is $1,000 to $5,000 per
person.
There are other coverages included in a homeowners policy like additional living expenses
and appurtenant structures. These are a percentage of the dwelling amount but can be
increased. Valuable items like guns, jewelry, furs, and silverware have limitations but
can be insured separately with a "floater" endorsement. Also, the standard
policy does not provide coverage for earthquakes and floods.
In summary...insure your home to true replacement cost amount with the highest deductible
that is cost effective for you. Spend some time discussing your insurance needs with your
Independent Insurance Agent.
W. Elliot Free
Knight-Free Insurance Agency, Inc.
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Last updated: Thursday, July 19, 2001 12:21:00 AM
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