A home is likely the biggest purchase you will make in your life. Home insurance protects that purchase against covered losses. Your insurance policy has coverage in place for physical damage to the house and other structures, your personal property, and liability for the household members.
Physical damage coverage protects your home. Coverage can be replacement cost or actual cash value. If the option is available, replacement cost is always the better coverage option. While it does cost more, here is why it’s worth it: if a total loss occurs, replacement cost pays to replace your home with the same like, kind, and quality. The difference with actual cash value is that your insurance carrier pays the cash value of your home in the same total loss. When you take into consideration depreciation and labor costs, actual cash value could lead to a shortage in making you whole again.
We try to always quote replacement cost. However, sometimes ACV is the only option available based on the carriers requirements for coverage. For example, the age of the home or age of the roof could be reasons to insure the home at ACV. Although, some carriers will rate just the roof at actual cash value.
You also have physical damage coverage for other structures. This protects items like detached garages, garden sheds, fences, and other property structures that are not your house. Just like with the home, coverage for other structures comes as replacement cost or actual cash value.
Personal property coverage is in place to protect your belongings. Similar to physical damage, the coverage options for personal property are replacement coverage or actual cash value. Again, replacement cost is the better coverage.
If you, your family, or your pets cause damage to others or others’ property your homeowner’s liability coverage protects you personally against lawsuits.