4 Steps to Ensure You Have the Right Type of Home Insurance

4 Steps to Ensure You Have the Right Type of Home Insurance

There are a lot of risks to consider as a homeowner right now, and those risks only increase based on the value of a home. Supply chain disruptions, parts and labor costs, and inflation are all volatile considerations when accounting for the everyday upkeep and repairs needed to keep a home running.  If you have any questions, contact our office at 413.475.7283 or Complete our online quote form today!

Agents need to ask their clients one very important question: Does your home, one of the largest investments a client may ever make, have the right type of replacement coverage?

A key point of consideration is the valuation of the home and what it will cost to rebuild should an unexpected event take place. There are many different home valuation terms, so it is important to understand which type to take into consideration when it comes to insurance:

Market value. This reflects the price a buyer is willing to pay for a home considering location, desirability of the neighborhood, quality of schools and other factors.
Appraisal value. Determined by a lender, this valuation ensures a homeowner doesn’t borrow more than the value of the home.
Assessed value. This is assigned to a residence by the local municipality for tax purposes.
Replacement cost. Replacement cost is calculated by the insurance carrier to determine the expense to rebuild the home after a significant loss to the same condition prior to the loss.

Here are four steps agents can recommend to their clients to make sure their insurance matches their house’s value:

1) Recommend having a home cost valuation. A replacement cost valuation of the home can help a homeowner determine if their home is underinsured. An agent can help set these up for their clients. Knowing exactly what a home is worth will give agents an idea of what type of coverage and how much of it is needed.

2) Educate clients on the different coverage types. After accounting for the home valuation, agents can then ensure their client’s insurance policy provides the proper coverage for their unique needs so they aren’t stuck with any high out-of-pocket costs and unexpected expenses during a loss.

3) Make sure all home features are accounted for. For homeowners with a high-value home, standard industry tools used to determine home replacement cost might not adequately reflect its specialty building materials, high-quality craftsmanship and custom features, many times resulting in insufficient coverage.

4) Consider offering private client services. Agents who work with homeowners with high-value homes should consider working with a high-net worth insurance carrier to help their clients avoid being underinsured.

Some carriers offer unlimited dwelling replacement cost coverage in cases of a total loss. This means if the homeowner has a covered loss, the home will be repaired or replaced with materials of like kind and quality even if the expense is more than the amount listed on the policy. Also, worth noting is the opportunity for a replacement cash-out option, which allows homeowners to collect and use funds up to their coverage limit should they wish to move and not rebuild in the same location. Contact Encharter Insurance at (413) 475-7283 or visit www.encharter.com to review your homeowners insurance coverage and look for ways to save money on your current insurance policy.

Source: https://www.iamagazine.com/markets/4-steps-to-make-sure-homeowners-have-the-right-type-of-insurance

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