Insurance Agents in Grand Prairie, Arlington, Mansfield, Cedar Hill and Irving should offer multiple types of Homeowners insurance policies. The first distinction in these policies are the Dwelling policy and the Homeowner policy. Today I will speak about the Homeowner policy. So that you know, the Dwelling policy is one that provides coverage for the structure of the building. Anything that is attached is included in this coverage. You can add and take away different coverages but that is for another time. The typical Homeowners policy is broken down in to multiple types of coverages and with different perils covered. Perils are the event that occur that cause a loss, ie wind, fire and so forth. The standard policy is an Actual Cash Value policy which means it covers you for the current value you of the policy. This is important to know because this is a principal covered in the basic idea of insurance. The rule of indemnity. The rule of Indemnity means that the insured (you) should be indemnified or placed in the position you were before the loss occurred. You did not have a brand new home before the loss occurred. You had a 1500 square foot, $100,000 home. In order to build that 1500 square foot home, you could spends upwards of $100/ square foot which means you would need $150,000 to build a NEW home. Because of this, insurance companies began offering Replacement Cost to their insurance policies. Insurance companies have their own replacement cost estimators built into their quoting systems. They can now determine what it takes to build you a new home should a loss occur.
This is only one aspect of the Replacement Cost feature and I will discuss those at a further date. As your home ages and insurance rates begin to increase, remember that you have the option to purchase a policy for the Cash Value of your home instead of the Replacement Cost.