After closing another year…time to get organized!
- Add Earthquake Insurance
- Update my Home Owners Insurance Coverage
- Add kids to the Car Policy
- Call of visit Statewide Insurance Agency for all Home and Auto Insurance needs
Statewide Insurance Agency offers Oklahoman’s that are looking for home insurance options so that the proper balance between cost and coverage is achieved.
The discussion that follows explains the difference between Replacement policies and Market Value/Actual Cash Value policies. We understand that no one size fits all Oklahoma consumers when you are getting quotes for your homeowners insurance.
It is quite common for insurance companies to offer quotes on homes in Oklahoma City for more than the market value. This often poses the question from Oklahoma homeowners, “Why is my house being insured for more than it is worth?” Before determining how much to insure a house for, it must be decided how the insurance company will value the house if there is a claim. One method offered is to value the property at Replacement Cost, which as the name implies, is intended to pay to replace the property, without regard to the original or current purchase price and without regard to depreciation.
In most situations, the Replacement Cost option is going to result in a higher claim payment then if the property was insured at its current value (sometimes called Actual Cash Value coverage – ACV). An insurance company is only obligated to pay up to the limit of insurance; therefore, the house may need to be insured for more than it is worth. In order to obtain Replacement Cost Coverage, the house will need to be insured for the amount it would cost to replace it.
Most property depreciates in value over time. A television set would not be sold today for the same amount it was purchased for ten years ago; it would be sold for less, most likely much less than the original purchase price. A policy containing a replacement cost provision would pay today’s cost of a new television set of like kind and quality which would be more than if the policy only paid for the value of the ten-year old television set (see ACV coverage above).
On a larger scale, the cost to rebuild or replace an entire home could be significantly more than the home was purchased for or could be currently sold for. Even for a home built this year, the cost to rebuild it very easily could differ from the original cost. There are several factors to consider when making an attempt to measure the cost of replacing a home, such as:
No economies of scale
Cost of preparing the home to be rebuilt
Access to the home site may be limited or obstructed
Increase in labor costs due to high demand, as in the event of a catastrophic event
Increase in material costs, possibly due to shortages or discontinued
There are several methods used to estimate the replacement cost of a home. Some of the factors insurance companies use are:
Type of foundation
Attached or detached garages
Location of the home
Number of rooms and baths
Replacement Cost Coverage is an option many homeowners should consider when looking for homeowners insurance. Obtaining this coverage will require the house be insured at the estimated Replacement Cost value, which typically is a higher amount than the market value. With the limit of insurance being higher, the premium will also be higher. Certainly no one wants to pay more for insurance, but the difference in a claim payment could be several thousands of dollars.
Oklahoma Homeowners usually think about the insurance on their home twice — when they get new homeowner insurance quotes and when they need to file a claim. The first is often hurried; a policy is needed to complete the mortgage package or equity loan, and the driving concern may be cost and speed more than depth and type of coverage. The second is the day after the fire, hailstorm, or other natural disaster. Unfortunately, that hastily purchased cheap homeowners insurance policy may not be the bargain it seemed. The time to learn about the breadth and depth of coverage is at the time of purchase, before the loss.
There are two primary types of homeowner’s insurance: replacement cost and actual cash value. In a replacement-cost policy, the structure is insured for the cost of repairing the damage or building a comparable replacement, regardless of its age. If mandated by the local authorities, the repairs and construction will have to incorporate any upgrades required by the building codes in force at the time of the rebuild.
A key provision is that in a replacement-cost policy, there is no reduction in the payout because of depreciation. A 10-year-old roof is paid out the same as a nearly-new roof. For example, a 15-year-old roof is destroyed in a hailstorm. The roof has multiple layers of shingles, and the sheeting is deteriorated. New building codes require a full tear-off, including new sheeting and rafter repair. A replacement-cost policy will cover the supplemental work, even though the rafter damage isn’t a direct result of the storm.
As the name implies, an actual-cash-value, or ACV, policy pays out the fair market value of the damaged portion of the home at that time of the loss, minus depreciation. For example, a 15-year-old roof destroyed in a hailstorm may only be valued at $2,000 to $3,000. After the typical $1,000 deductible, the homeowner may only receive a single lump-sum payment of $1,000 to $2,000 to apply to the cost of repair or replacement of the roof.
Another consideration is the insurance coverage on the contents of the home. This comes into play after a major loss such as a fire or tornado. Replacement-cost policies pay for a comparable item, without regard to the age or condition of the original.
Some policies may be hybrids, with replacement cost on portions of the house, but ACV on other parts, such as the roof or windows. Contents are often rated at ACV. This is done for many reasons and there is nothing wrong or unprofessional about it. However, the policy owner needs to understand each part of the coverage — what is included and what is excluded.
The difference between replacement cost and actual-cash-value policies is significant, and homeowners need to make an informed choice. The primary reason to choose ACV is cost. The premiums for an ACV policy are significantly less than a full replacement policy. For many homeowners, ACV may be all they think they can afford. However, after a major loss, that cheap policy may not even pay back the premiums paid over many years.
Oklahoma City Homeowners shouldn’t wait for a disaster to take a second look at their insurance. A licensed agent can go over the existing coverage and explain not only what potential payouts might be, but also ways to economically upgrade. Feel free to call us at 405-285-2929 today, and we will answer any questions you have about homeowner’s insurance.
By the way, Statewide Insurance Agency offers Actual Cash Value home insurance policies as well as Replacement homeowners insurance policies!
“We shop up to 10 companies to find you the best coverage and price on your Oklahoma home insurance”
Statewide Insurance Agency https://okstatewide.com
There are many insurance companies, so choosing between them can be a challenge. Here are the main points to keep in mind when selecting an insurance company:
Not every company is licensed to operate in each state. As a general rule, you should buy from a company licensed in your state, because then can you rely on your state insurance department to help if there’s a problem. To find out which companies are licensed in your state, contact the state insurance department.
Many companies sell insurance policies and prices vary greatly from one to another, so it really pays to shop around. Get at least three price quotes from companies, agents and from the Internet. Your state insurance department may publish a guide that shows what insurers charge for different policies in various parts of your state.
You buy insurance to protect you financially and provide peace of mind. Select a company that is likely to be financially sound for many years, by using ratings from independent rating agencies.
Your insurance company and its representatives should answer your questions and handle your claims fairly, efficiently and quickly. You can get a feel for whether this is the case by talking to other customers who have used a particular company or agent. You may also want to check a national claims database to see what complaint information it has on a company. Also, your state insurance department will be able to tell you if the insurance company you are considering doing business with had many consumer complaints about its service relative to the number of policies it sold.
You should feel comfortable with your insurance purchase, whether you buy it from a local agent, directly from the company over the phone, or over the Internet. Make sure that the agent or company will be easy to reach if you have a question or need to file a claim.
By Insurance Information Institute http://iii.org
Why a Home Inventory Is Important For Every Oklahoma Homeowner Let’s try a little exercise: Can you list everything you own from memory? Didn’t think so. The fact is most homeowners own more things than they realize. It’s easy to remember the cars, the computer, the TV. But what about that holiday china in the garage? Or every pair of shoes? All of it is regarded as personal property for Oklahoma home insurance purposes. And if your Oklahoma City home is destroyed by fire or some other disaster, having a list of your possessions makes filing a claim easier — and helps you put your life back together. Why should I complete a home inventory? What’s the best way? Comparing the value of your belongings to the “contents” limit listed in your policy helps you make sure you have enough insurance to replace them if they are lost, stolen or destroyed as a result of a covered loss. The easiest way to take an inventory is to use a video camera, recording and describing items as you walk through your house. Or, you can use a regular camera and create a home inventory checklist. Here are a few tips for completing and storing your inventory: Add brand names and descriptions where you can, especially on large-ticket items. Serial numbers are helpful to note. Keep any receipts you have with the list to make the claims process easier. Store your video or photo inventory offsite so you won’t lose it if your house is damaged. Update your personal property records when you purchase new furnishings and valuables. Though the task may seem daunting, it’s important to try. An incomplete inventory is better than nothing at all. How much personal property coverage do you need on your home insurance? We can assist you in analyzing your insurance needs and help you decide how to most effectively protect your personal property. You should consider getting a quote for full-value coverage, which will pay for the replacement value of your personal belongings. A standard policy typically covers personal property only up to its actual cash value, determined by taking the replacement cost and deducting depreciation, which can be substantial. (For example, a 5-year-old TV is usually worth much less than what it would cost to purchase a new one.) Finally, remember your homeowners insurance policy covers valuable items such as jewelry, furs, art and antiques, only up to set dollar amounts. If the cost of replacing them exceeds these limits, you may want to purchase scheduled personal property coverage. The Insurance Information Institute has a FREE online tool that can help you create your inventory. Just visit www.knowyourstuff.org for more details. We hope you’ll never need the home inventory, but preparing for the worst can prevent a lot of hassle later! Statewide Insurance Agency in Edmond, Oklahoma specializes in home insurance and auto insurance. Because we represent multiple companies we are better at matching customers to companies.
Homeowner insurance policies typically limit coverage for certain types of Personal Property. Sometimes these limitations can be increased by paying additional money and sometimes another policy can be purchased to provide more comprehensive coverage in that particular area. Ask your agent about the personal property limitations within your policy. While the limitations vary from company to company, the types of limitations are very similar. For example, all policies will limit coverage for theft of jewelry, losses of cash and coins and theft of firearms, just to name a few. One of the companies we represent for home insurance is Travelers Insurance and I am copying an exert from their homeowners insurance policy that states their Personal Property Limitations within their home insurance policy…. 3. Special Limits of Liability. The special limit for each category described below is the greater of the limit shown below or the special limit for such category, if any, shown in the Declarations. Such limit is the total limit for each loss for all property in that category. These special limits do not increase the Coverage C limit of liability. a. $200 on money, bank notes, bullion, gold other than goldware, silver other than silverware, platinum other than platinumware, coins, medals, scrip, stored value cards and smart cards. b. $1,500 on securities, accounts, deeds, evidence of debt, letters of credit, notes other than bank notes, manuscripts, personal records, passports, tickets and stamps. This dollar limit applies to these categories regardless of the medium (such as paper or computer software) on which the material exists. This limit includes the cost to research, replace or restore the information from the lost or damaged material. c. $1,500 on watercraft of all types, including their trailers, furnishings, equipment and outboard engines or motors. d. $1,500 on trailers or semitrailers not used with watercraft of all types. e. $1,500 for loss by theft of jewelry, watches, furs, precious and semiprecious stones. f. $2,500 for loss by theft of firearms and related equipment. g. $2,500 for loss by theft of silverware, silverplated ware, goldware, gold-plated ware, platinumware, platinum-plated ware and pewterware. This includes flatware, hollowware, tea sets, trays and trophies made of or including silver, gold, platinum or pewter. h. $5,000 on property, on the “residence premises”, used primarily for “business” purposes. i. $1,500 on property, away from the “residence premises”, used primarily for “business” purposes. However, this limit does not apply to loss to electronic apparatus and accessories described in category j. below. j. $1,500 on electronic apparatus and accessories, while in or upon a “motor vehicle”, but only if the apparatus is equipped to be operated by power from the “motor vehicle’s” electrical system while still capable of being operated by other power sources. k. $250 on tapes, records, discs or other media that can be used with any electronic apparatus, while in or upon a “motor vehicle”.
It’s Fire Prevention Week and we are learning about staying safe in the kitchen. @nfpa http://j.mp/1qo2wcE
It’s not unusual for homeowners to spend thousands of dollars erecting a retaining wall. Most quality homeowner insurance policies are worded consistently on this issue. A retaining wall is considered a Detached Structure and the maximum amount of coverage is usually 10% of your Dwelling Coverage limit. The retaining wall is usually covered for damage caused by Fire, Lightning, Wind (including tornado), damage caused by vehicles and a few other types of perils. HOWEVER, most of the damage that I have seen arises from retaining walls falling due to saturated soil. This usually happens when we have experienced an extremely wet period lasting 3 or more days. This falls under the Earth Movement policy exclusions and is not covered.
Mercury Insurance Group (NYSE: MCY) continues to advance it’s position as a stable, long term provider of home insurance and auto insurance to the Oklahoma City market. For the most part, “value” is made up of price, quality coverage and good claim service. Mercury is exceeding our expectations with their “value” propostion for Oklahoma City homeowners insurance and auto insurance. We also like the fact that they maintain an A+ rating with the A.M. Best Co. something few insurers can say. And it gets better…..in 2012 Mercury was recognized by Forbes as one of “America’s Most Trustworthy Companies”….. read more about it…