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Homeowners Insurance: How is the Dwelling Coverage figured?

Is Jeremy from shine Insurance in this video is about market value as it has to do with an I get this question all the time it's a super comet right now when it comes to this topic so we will address in this video just we'll talk about how replacement cost pretty quick just going to lay it out for you let's start with some definition replacement cost is the amount of money it would cost to actually rebuild your home that means hiring contractors having drywall put in framing gun kitchen stuff to put in your crawl space still probably not in that order but you get what I'm saying the actual cost of rebuilding your home so if your home were to burn down or be knocked over by a tornado or something like that how much is it going to cost us our cost the insurance company to rebuild your help that's the replacement cost your home could sell for in the current retail Park is so if you're a first-time home home right now you're looking at purchasing that home for a certain amount of money with how much it would cost to rebuild that house because the market in your area could be much higher this high demand low supply of home then it's going to be more expensive in your area to buy homes if there's blow demand High supply of homes is in your area that side of things are real estate side of thing has nothing to do with what it would actually cost purchase the materials that have a contractor to rebuild your house that's a completely different market value is what your house is worth on the market if it were to be purchased or you were to purchase it and how much it cost would cost to rebuild a dwelling coverage for coverage this is the estimated replacement cost of your home amount of money that the insurance company steals it would cost to replace your home and it's the major driver of the price of your insurance policy that has lots of different things that affect price but this dwelling coverage is based on a replacement cost in is a major factor in the price that you have well replacement costs to vary widely around the United States there is a rule of thumb standard home should be insured for and I would say all homes should be insured for at least a hundred and twenty-five. Really does depend how accessible materials are accessible building you're in the middle of a big city and something bad happens it's a lot tougher to rebuild a house in that space that would be if you're a Suburban neighborhood or something of that nature but $125 is kind of the bottom side of what I would expect your replacement to be $125 per you have a much nicer home a custom home you may see 200 $250 obviously goes up as you have more custom finishings if your home is a custom home is going to cost more to rebuild then if it was a standard home built in a neighborhood that was all built at the same time or something like that so somewhere between 125 and $200 a square foot depending on if you own a fairly standard home with 1500 square feet should be somewhere around $188,000 talk to your insurance agent and ask them if you'd like for them to just show you the replacement cost estimate the back replacement cost estimates though they have very general information to generally when you look at a replacement cost lot of misinformation like 70% of your houses is a carpet when really a lot of it is hardwood or something like that we don't know everything about your home we haven't walked through your home most of the time we're generalizing we're getting very general information about your home and replacement cost and I hope that is pretty close in some of these numbers can help you figure that out but you can't ask an insurance agent to show you the replacement cost estimator that they created under insure your house what if you insure your home for less than actual replacement cost well if your house burns down or is hit by a tornado or something like that but swelling coverage the limit of liability on that coverage a line so if they're rebuilding your house and they ran out of money because they ran out of that they're going to stop even if it's 75%. Building rebuilding your house in that situation unless you have one of two different kinds of coverages that I think are awesome and great companies always provide guaranteed replacement cost is too endorsements to insurance policy or addition to an insurance policy if you some extra coverage extended replacement cost is often percent more than what your swelling coverage is guaranteed replacement cost is even better than that so essentially these coverage is build in a buffer so that if your number is wrong the insurance company is going to pay price of wood in that app will likely the price to replace your home is going to cost then what we thought it would be in normal situation this is why having extended replacement cost for guaranteed replacement cost really help you out even if you have your replacement cost figure correctly on your insurance policy to make sure your policy has one of those two options on it and like I already said that provides extra coverage if your replacement cost estimate is incorrect or if the price of materials changes because of some situation like that a tornado taking out a lot of different properties at the same market value of Effexor it really shouldn't have anything to do with insurance market value and insurance are not really related to each other at all insurance is all about replacement cost what it would cost us to replace your market value has nothing to do with it but occasionally there are some scenarios where market value will morgan is 4 more than the replacement cost of the housing market value in your town is higher than it would actually cost replace your house a lot of times the more why are the insurance company raises the coverage in the end that covers wouldn't be used because I have nothing to do mortgage company will make you cover the amount you borrowed from that mortgage company on your insurance policy whether it actually reflects the replacement cost or not said that buy houses for way less than the replacement cost if you value is very low $125 no matter what the market value is in your town so when market value is low often times people feel like why I bought this house for $80,000 shirt for $200,000 the answer is because we're not ensuring for market value that can ensure for less than replacement cost you just have to know it's not going to rebuild your house if your house would have burned down you are only going to get the limit of liability that you put on the insurance so what we addressing this video where we talked about the quick definition cost vs market value hopefully you know the difference now and you're super clear on that we also talked about how replacement cost affect your insurance and how market value don't you want some more three awesome places I'd love to see you go hero versus our new home buyers guide if you go to the same channel at the playlist lots of videos in that that playlist it also has a complete course behind it if you want to check that out as well at nwhomebuyers.net recently we put out is the five reason free video to watch early on understand how homeowners insurance policies work in a claim situation. Shine as always

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