With the crazy weather these days you really never know what you are going to need.
With the SO Cal fires going on right now I figured I could give a crash course on insuring to value.
Here is a unfortunately and way to common example:
- 4000 sq ft home purchased in 1999 in Malibu for $2,000,000
- Home replacement cost was estimated at $1,000,000 or $250 sq ft
- You home is involved in the recent fires
- You never reviewed/increased your coverage
- Your policy had inflation guard built into it at the industry average of 4%
- Your home burns to the ground and your insurance will pay out $1,315,932 or $328 sq ft
Problem: Cost of construction in Malibu is in the $400sq ft + range.
Items that are built into your policy that can help:
- Extended replacement cost: This will help to pay above and beyond your policy limit. Any where from 10% to 100% of your dwelling amount.
- Building code upgrade: This will pay for items such as interior sprinklers, double pane windows whatever the items that are now required that your home may not have had. Coverage amount 0-100% of your dwelling amount.
- Loss of Use: This will pay to put you up in a "like kind" location. Depending on the company this coverage would be as low as 20% of the dwelling to "Unlimited"
Moral of the story: Review, Review, Review. In most cases there are things you can do to your policy to increase coverage and keep the premium the same.
Ask your agent to show you some options like: Higher deductibles, consolidated policies and make sure you are getting all the discounts possible.
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