House Insurance

Do you have enough insurance to rebuild your home?
Your policy needs to cover the cost of rebuilding your home at current construction costs in the event that it is destroyed.

Consider the following types of coverage:

• Replacement Cost
  Most homeowners policies cover replacement cost for damage to the structure. A replacement cost policy pays for the repair or replacement of damaged property with materials of similar kind and quality.
  
  
• Extended Replacement Cost
  This type of policy provides additional insurance coverage of 20 percent or more over the limits in your policy, which can be critical if there is a widespread disaster that pushes up the cost of building materials .
  
  
• Inflation Guard
  This coverage automatically adjusts the rebuilding costs of your home to reflect changes in construction costs.
  
  
• Ordinance or Law coverage
  If your home is badly damaged, you may be required to rebuild it to meet new, and often stricter, building codes.
  
  
• Water Back-Up
  Insures your property for damage from sewer or drain back-up. This is offered as an add-on to a standard policy.
  
  
• Flood and Earthquake Insurance
  Standard homeowners insurance does not include coverage for natural disasters such as flooding and earthquake.
  
  Flood insurance is available through the federal government’s National Flood Insurance Program as well.
  
  Earthquake coverage is available in the form of an endorsement from private insurance companies. In California, supplemental coverage is also available from the California Earthquake Authority (CEA).

Most homeowners insurance policies provide coverage for your personal possessions for approximately 50 percent to 70 percent of the amount of insurance you have on the structure of your home.

The best way to determine if this is enough coverage is to conduct a home inventory. A home inventory will detail everything you own and the estimated cost to replace these items if they were to be stolen or destroyed by a disaster.

To make this task simple, the I.I.I. offers free, downloadable software and information on how to create and store your inventory at www.KnowYourStuff.org.

You can insure your possessions in two ways: by their actual cash value or their replacement cost. Make sure you review with your agent or company representative which type of coverage is best for your particular situation.

• Cash Value Policy
  This coverage pays the cost to replace your belongings minus depreciation.
  
  
• Replacement Cost Policy
  This coverage reimburses you for the full current cost of replacing your belongings.

Most standard home and renters insurance policies will generally provide at least $100,000 of liability coverage. Additional liability protection is available and everyone should consider getting enough insurance to protect their assets and finances.



For more information on how to properly insure your home, go to the I.I.I. Web site.
The Insurance Information Institute.