The Texas Department of Insurance has a wealth of useful information to help home owners learn about their homeowners insurance options. It's easy to get confused when so much information is presented at one time. We want to clarify some things so you can bring a list of questions with you when you come to talk to your independent agent.
Distinctions Between All Risk and Named Perils Home Insurance Options
When it comes to age-old clichés, “you get what you pay for” is very applicable when talking about homeowners insurance options. Higher insurance premiums translate into more comprehensive coverage.
All Risk Policies
An All Risk homeowners insurance policy is to home insurance what major medical is to health insurance. It is your most comprehensive homeowners insurance option. It covers you for any peril unless the policy specifically excludes it.
To return to the health insurance analogies, think of named perils as the homeowners insurance equivalent to health insurance that only covers you for hospitalization. You wouldn't be covered for doctor's visits, physical exams, routine screening tests and that sort of thing. Named perils only protects you for the situations specified in the policy.
Replacement Cost or Actual Cash Value?
People often get confused about the difference between replacement cost and actual cash value. You pay more for replacement cost, but it doesn't matter what the cost of replacing your personal property is, because it's covered.
Likewise, if your house is seriously damaged, or destroyed, unless you opted for replacement cost, you probably wouldn't be able to get enough money back from the insurance company to repair the damages, or rebuild your home.
Actual cash value policies look at the value of your home and property when you bought them. Like a car and other things, everything depreciates over time, because of wear and tear and general use.
Actual cash value policies subtract the depreciation from the amount you paid for your home and property. If you bought your home 20 years ago, the cost was a lot lower than what you'd pay for it today, and that's the figure the company looks at if you choose the actual cash value option over replacement cost.
Take the time to compare your homeowners insurance options online, and then contact us to talk about your situation. We will help you look at different coverage options to find the right one for you and your family.