Phoenix Urban Living News. Real Estate In Phoenix Arizona

Home Insurance Policy Basics Homeowners Need To

Most people do not even think about home insurance until the time that they need it the most. It is important that you know what is and what is not covered in the home insurance package that you have bought. Having the right insurance is often the difference between being able to replace your home and personal belongings. A the owner of a home, you should review the insurance you have on that home once every year. This will help to keep your coverage costs current with local costs of building, any upgrades you have done and inventory your personal belongings.

Most home policies cover damage from fire, hail, windstorm, riots, explosions and water damage not caused by flooding. In addition, they cover losses from theft. Policies generally cover such expenses as living somewhere else while your home is being repaired or rebuilt.

Policies also cover your legal liability when someone is injured on your property.

Both the home structure and the contents of the home are covered in most homeowners insurance policies.

In covering the home’s structure, there are three kinds of policies. One is for replacement cost. It covers the cost to replace your home if damaged and does not reduce the amount paid for depreciation. Replacement home insurance does have a maximum limit that it will pay.

An extended replacement cost home insurance policy gives you an additional twenty percent protection if construction costs suddenly increase. This can happen after a major storm when contractors are very busy replacing or repairing many homes.

Cash value home insurance is usually cheaper to buy but covers cost of replacement less the depreciation for use and age. If you lose a fifteen year old roof from your home, the insurance will only pay for one fourth the cost of replacing the roof since it has been used for three quarters of its twenty year life expectancy.

Be sure that you have enough insurance to rebuild a home if it is completely destroyed. The amount to rebuild may be different from the market value of the home. Without the correct amount of money to rebuild a home, you may only have enough money to pay for a portion of repairing or replacing items that are damaged.

One way to estimate the cost of rebuilding your home is to find the cost per square foot of building in your area. Multiply that cost by the square footage of your home to find an approximate replacement cost.

Other items that will increase replacement cost can be the number of bathrooms, the exterior wall construction, the number of fireplaces or any other special upgrades that you have in your home. Be sure that you have enough insurance to cover these upgrades.

If building codes have changed significantly since your home was built, it can alter the construction costs of replacing a home.

Make sure that your insurance is satisfactory to your lender. They normally require that you have enough insurance to cover what you owe on your home.