Home insurance and understanding what you have are essential. What I found is that people fall into these categories:
· Understands their policy and is not afraid to use it
· Some understanding but will not use it for fear rate will increase if a claim is made.
· Some have no idea how their policy works and wait until someone knocks on their door or notices the damage and makes a call and learns the good and bad.
No matter what category you see yourself in, the goal is to help you understand your role and responsibilities when a claim needs to be made.
First, look at your declaration page. This page will have your address, the insurance address, contact information, policy number, coverages, limits, deductibles, and coverage dates.
The key is to understand what is covered:
Coverage | What it covers |
Dwelling | Financial protection to repair or replace the home |
Other Structures | Fence, shed, barn, pool, etc., are not part of the main home but are covered. |
Personal Property | Things in your home, garage, etc. might extend to other locations |
Loss of Use | If displaced from your home due to loss or repair, a temporary place will be provided. |
Liability | Protects you or your pet (some restrictions) if someone is injured on or off the property or are sued for injuries. |
Guest Medical Coverage | Medical coverage if a guest is injured on your property |
The next step is to understand if you have RCV (Replacement Cost Value) or ACV (Actual Cash Value).
RCV will cover the actual cost to replace or repair the dwelling (home).
ACV will have a depreciation factor that might not cover the repair or replacement. The roof, for example, might have an RCV or ACV, depending on your policy.
Roof example: Rip and replace
If you have RCV, the insurance coverage will replace like item minus deductible that you must pay no matter the roof's age. The exception is if the insurance company deemed the damage is caused by negligence. Negligence is defined as "reasonable." Meaning what others would do in your situation.
ACV will pay the depreciated value of the roof. If the roof has a 25-year warranty and the roof's age is 13 years, insurance will pay 48% of that life.
Math behind ACV:
Cost of new roof $10,000 - $1,000 deductable = $9,000
Cost of roof minus deductable $9,000 x 48% life left = $4,320
$9,000-$4,320 = $4,680 is the out of pocket cost.
Why is it's essential to have the home, roof inspected yearly?
Provides current condition with proof that someone inspected with a time stamp. It is the best defense against possible negligence claims by an insurance company. It is just best practice to have yearly inspections, and many roofing companies offer free inspections.
If your time is limited and you do not have time to be home for the roof inspection, request the inspection be completed with a drone. Drone inspection offers contactless inspection with high-tech 4K pictures and no risk of a person falling or causing damage. is