Serving Missouri and Kansas
Whether you own or rent a home, manufactured home, townhouse, or condominium, a good way to protect your home against certain types of loss is homeowner's insurance. Homeowners with mortgages are required by their lenders to have homeowner's insurance. When purchasing homeowner's insurance, it is important to choose the right policy. Homeowner's policies are classified by the types of perils (any events that cause a financial loss) they cover. There are six main types of homeowner's insurance used today.
Basic Types of Policies
Actual vs. Replacement Cost
Actual value pays the current fair-market value of an item. This will usually not give you enough money to replace the item due to depreciation. Used clothing and furniture are not worth very much. For example a three-year-old computer may only be worth $100 but it may cost $500 to replace it. Replacement value policies will pay you $100 for the computer if you don't replace it or $500 if you replace the item. Homes insured under the HO-8 policy are only covered for the actual cash value. Other policy owners have a choice. Replacement value insurance is more expensive but usually worth the extra in times of a loss.
Most standard policies cover the following:
In addition to standard provisions, you may want to consider automatic inflation adjustments. This way as the value of your property increases, you will remain fully covered. Even with inflation coverage it is advisable to periodically check with your agent to be sure your coverage has kept up with increased values and construction costs.
How much Coverage Do You Need?
The coverage or face amount of the policy is based on the cost of the Dwelling. To have your claim covered up to the face amount of the policy you need to make sure that you cover at least 80 percent of the value of the home. Insurance companies use 80 percent since part of the value of the home is in the land. If you do not cover at least 80 percent, even if your claim is less than the face value of the policy, the insurance company will prorate the claim.
315 E. 18th Ave., North Kansas City, MO 64116
Phone: 816-454-8833 Website: www.abbainsurance.com
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