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Please keep in mind that this is intended to be general education on insurance. All policies have conditions, limitations, and exclusions that we have not discussed.
ASKING THE RIGHT QUESTIONS
Replacement Coverage (RC) vs. Actual Cash Value (ACV) Coverage
Replacement coverage means that used material or used property will be replaced with new property. ACV coverage means that you can expect a deduction from your settlement based upon the age of the property…………. the older the property, the greater the deduction. Some policies offer RC, some offer ACV and some do a combination of the two. It is possible to have RC on your home and ACV on your personal property. To further complicate things, some policies will offer RC on the home with the exception of the roof surface which is covered at ACV. When shopping, it is good to ask three questions with regard to this issue……….
- Is the coverage on my home RC or ACV?
- Is the coverage on my roof surface RC or ACV?
- Is the coverage on my personal property RC or ACV?
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Rebuilding Your Home
Always ask the company what is the maximum amount that would be paid to rebuild your home. If the policy includes an endorsement agreeing to pay an amount over the stated amount in the policy, ask the agent if there are conditions to that endorsement. For example, can you rebuild somewhere else or are you required to rebuild in this same location? Are you allowed to take your rebuilding money and purchase another home rather than going through the rebuilding process?
Examples of Things Not Covered Or Are Limited Under Home Policies
- Rising flood water
- Theft of jewelry
- Tools and other property used in a business
- Damage caused by insects and animals
- Shifting soil that results in foundation problems
- Appliance breakdown
- Slow drips of water that go on for an extended period of time
- Business Liability
- Boats, trailers, all-terrain vehicles, dirt bikes, and motorcycles
- Mobile equipment such as tractors
- Theft of guns, money, silver, and gold
- Sewer back-up
Obviously, there are many other exclusions and limitations in home insurance policies; however, these are the issues I most often run on to. Several of these items can be covered under your home policy by purchasing the appropriate endorsement.