Many people get homeowner's insurance because it is required when purchasing a home. But how many actually look at what the insurance policy will cover and how much it will cover if the home is destroyed or damaged by a fire, hurricane, windstorm, hail, tornado, or other disaster?
Most people believe that if anything happened to their house they would be covered because they have an insurance policy. However, there are many things, such as floods and earthquakes, which are not covered under the basic homeowner's insurance policy and often require their own separate insurance policy. Also, not all insurance policies cover everything or the full cost of damaged personal items in a home.
Start With the Basics
Find your homeowner's insurance policy and start by reading through it. Look to see if you have a "replacement cost" policy or an "actual cash value" policy. Most of the time, if you have an actual cash value policy, you may want to get an endorsement so all your personal items in your home will be covered under a replacement policy as well.
An actual cash value policy will provide you with the money it will take to return your home to the condition it was in right before the damage occurred. So if your home already needed a new garage and a new roof, your policy will only give you the amount of money for your home in the shape it was in prior to the damage. This can be significantly less than what you need to rebuild the home, as this type of policy gives you about 15 percent less than a replacement policy.
Replacement coverage, on the other hand, will give you the amount of money it will take to replace the home and all contents, up to the limits stated in your homeowner's insurance policy. There is another, more rare, type of policy, guaranteed replacement cost coverage, which will repair or replace a damaged home and the contents in the home without a policy limit or deduction for depreciation.
The Television Example
When an older television inside the home is damaged and that same television costs $1,000 today, the guaranteed replacement cost coverage would pay the full cost. However, if a homeowner had the actual cash value policy, they would get the replacement cost minus depreciation. This is why it is important to have an insurance policy that will cover the replacement value. Although this may raise your insurance premiums about 10 percent or more, it may be worth it when you need to turn in a property damage claim in Texas.
For more help understanding your homeowner's insurance policy or to talk with a lawyer for free about your Texas insurance claim, call the Voss Law Firm to speak with a skilled Texas insurance litigation lawyer at 888-614-7730.
Make sure to download your FREE copy of attorney Bill Voss's book, Disputes With Your Insurance Company: What All Consumers Need to Know.
