In: Root » Legal and finance » Insurance
It would be natural for you to expect that insurance for your home would cover the cost of rebuilding your house in case it is destroyed during a catastrophic emergency such as a fire, earthquake or other natural disaster. However, if you have been lucky enough to see your home value rise since you have purchased it, this might not be the case.
Many home insurance plans will only cover the original cost of the house. Since the cost of building houses (equipment, manpower, etc.) may have gone up significantly since the house was originally built or purchased, that could mean that your payment for rebuilding your home winds up being less than what you need to effectively rebuild it to the same specs and with the same level of quality as before.
Instead of having to worry about cutting corners or downsizing your house in case you need to rebuild it, an easy solution is to make sure that you have Guaranteed Replacement Value Insurance. This coverage assures you that you be able to rebuild your house to its original condition in case it is destroyed even if it will cost more than it did when the policy coverage began.
The other option is an "actual cash value" coverage plan, which pays out the value of the home at the time the policy is triggered, even if this is less than the cost of replacement. This leaves home owner insurance policy holders stuck with the difference if it costs more to rebuild their homes.
There are some catches, however. Some insurance companies will place a limit on how much over the original home cost they will pay out in case of a catastrophic incident that requires the house to be rebuilt. This is typically around 120 percent of the original cost, so check with your agent to see if your policy has any caps.
Whether you opt for Guaranteed Replacement Value or Actual Cash Value insurance will depend on your personal preferences. The good news is that no matter what coverage you want, you can find it by getting a free home insurance quote from HomeInsuranceQuotes.us. It's the best way to find rates from leading insurance providers
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