Household Insurance Cash Value Compairison Rates

Let’s say you paid $200,000 and your home is worth $170,000 with depreciation in a tough economy.

Your home is wiped out and you submit your claim.  If you had actual cash value, you would receive the $170,000 in the form of a check from your insurer.  However, the $200,000 would be yours if you had obtained replacement cost value.  You would get enough to cover the whole cost of rebuilding your $200,000 home.

With replacement cost value, depreciation is not a factor in the settlement.  There’s also extended replacement cost value, where you can add 25% to 50% to the value of your home – if it costs $250,000 to build the home exactly how it was, you’d be covered under this policy.  Of course, it comes at an extra cost.

If you choose to pay extra premiums for this under your home insurance policy, it is important to determine the amount.  In this, it’s vital that you insure your home for what it’s worth – not merely the cost.

You can begin my calculating the cost to insure your home.  The square footage of your home multiplied by local building costs per square foot is a formula often cited.  You can also contact your homeowners insurance agent (or an appraiser – or both!) to help you find the cost and value of your home, which is a very strong way to proceed.