A house is a huge investment, and it’s probably one of the largest purchases you’ll make in your life. Protecting your home from financial loss is important.
Here are some answers to frequently asked home insurance questions.
How does my local fire department affect my insurance rate?
Fire protection agencies like your local fire department are rated by the ISO – Insurance Services Office. The rating is called a Public Protection Class, and each agency is scored on a scale of 1 (the best) to 10 (the worst) based on their protection services. Many insurance companies use this PPC rating and the distance of your home to the nearest fire department to determine the level of risk that your home will be damaged in a fire. Higher risk levels translate to higher rates.
How do you calculate how much it would cost to rebuild my home?
To determine how much it would cost for you to rebuild your home at current market rates, here are the factors that your insurance company considers:
- Construction labor rates in your immediate area
- The number of rooms and square footage of your home
- The type of materials used to construct your home
- The type of roof material on your home
- The number of floors
- Special features including additions, garages, and trim
- Materials, finishes, and fixtures throughout your home
How much will insurance pay to replace personal belongings in my home?
When you select insurance coverage for your personal belongings, there are two options:
You can choose replacement cost coverage to pay you the dollar amount that you need in order to replace damaged and destroyed items in your home.
Or, you can opt for actual cash value coverage that pays the value of your items, taking into account depreciation. This is the default coverage unless you specifically select replacement cost coverage.
Many homeowners under-insure their belongings and underestimate the amount of money that they need, especially considering the new possessions we accumulate throughout the year. Talk to your insurance agent about making sure that you have adequate coverage for all of your belongings.
What does homeowners insurance cover?
Some causes of loss will be specifically excluded from your home insurance policy, but if the cause is not excluded, homeowners insurance will help pay for personal liability, medical payments, and losses caused by damage or destruction of your home. Check with your insurance agent to determine what causes of damage your policy does and does not cover, as it varies by region and company.
Your policy might also cover damage from specific risks such as theft, fire, lightning, hail, and heavy winds.
Home insurance may also cover detached buildings on your property, such as sheds, detached garages, and guest cottages.