Don’t Get Caught Uncovered: Replacement Costs

When you’re making an investment as major as a house or a condo, it’s easy to feel overwhelmed by how much you’re spending and start looking for ways to save some money. Buying insurance is one of the least fun aspects of purchasing a house, especially since you just shelled out a bunch of money, and are probably hesitant to spending more. Plus, the magic of a new house is that it feels like nothing bad will ever happen to it, it’s new and exciting, and the last thing you want to think about is a fire, storm, or flood taking it out. 

Protect Your Investment 

But, however unpleasant, buying home insurance is the most important way to protect your real estate investment and keep yourself and your family safe in case the unexpected occurs. First, choose your insurance agent carefully. Don’t forget that many insurance agents are paid in commission, so they are not always looking out for your best interests, but for their own pocketbooks.

They want you to buy from them, so often they will offer you the lowest price they can find, even if that means you end up with coverage that is average at best. Insurance agents might give you quotes from lesser known carriers, or companies with poor service quality. Know that the least expensive insurance prices always means the least coverage.

The easiest way for an agent to reduce the cost of a quote is to take out the placement cost contents overage. While this will make your payments cheaper, it could cost you big time in the long run. Think about the contents of just one room in your home. You know that moment when you’re driving away from your neighborhood and suddenly can’t remember if you turned everything off? Say you actually leave the stove on and everything in your kitchen is ruined in a fire. All of us would want to rebuild and get things back to normal as soon as possible. But without replacement cost contents coverage, you wouldn’t get any money back to buy new appliances, dishes, glasses, etc. You would be responsible for all the costs of replacing all those beautiful kitchen items.

With replacement cost contents coverage, your insurance company would supplement the cost of re-buying by paying you the amount that your stuff was worth originally. That way, a disaster in your home at least has the silver lining of allowing you to go on a shopping spree without breaking the bank. 

Replacement Cost Coverage 

Keep in mind, every home insurance policy has replacement cost coverage for the home itself, so you need to be careful to check specifically for replacement cost contents coverage for the items inside your home. Always carefully check your insurance policy to make sure of what coverages you have before committing to a policy. Otherwise, you could find yourself after a storm or fire thrown into a different kind of chaos.