Two Questions To Ask Your Home Insurance Agent
When it comes to home insurance, there is no such thing as a one-size-fits-all policy. There are many options when it comes to home insurance, which can lead to variations between policies. This makes things confusing, especially if you want to understand what kind of coverage you have. Here are some questions to ask your homeowners insurance agent to better understand your policy.
Why Does Your Home Insurance Rate Increase Each Year?
Home insurance is designed to cover the repair of your home in a worse case scenario. Imagine how expensive it would be to build your home from the ground up if you had a house fire that destroyed everything. That is why a home insurance policy will have enough coverage to rebuild your home from scratch if necessary.
However, the cost to build your home will not be the same to rebuild it in the future. Due to inflation, the cost of construction materials will continue to increase over time, making home construction more expensive. It is likely that your home insurance policy accounts for this by increasing your coverage amount by the amount of inflation, which increases your premium as a result. Your home insurance costs didn't go up because the insurance company wants more money, but to protect you from not having enough coverage to repair your home.
Do You Have To Replace Everything That Was Lost?
Make sure you fully understand your policy and how it works when it comes to replacing personal property. You will have a set amount of coverage to replace personal property items in your home, which range from clothing to all of your tech gadgets. While it is common for a home insurance policy to allow you to replace anything was damaged up to your coverage limit, that doesn't mean you have to replace everything.
Your insurance policy should have the option to give you a depreciated value of items that were lost that you do not want to replace, with the depreciated value based on how old the items is. For example, your insurance policy may give reduce the value of an item by 5% for each year that you've owned the item, with a depreciated value of no less than 50%. This means a $100 item that is 10 years old could result in receiving a $50 replacement value if you do not replace it with a similar item that is brand new.
Every policy is different, so be sure to reach out to your home insurance agent for more information about your specify policy.