Does your homeowner’s insurance policy include comprehensive perils? Do you know what that means? Nearly every insurance policy has exclusions (perils that the policy excludes against). The exclusions can include earthquakes, flooding, and sump pump failure.
The short video below will help you with your understanding of what your homeowners insurance policy may or may not cover.
As always consult with your agent if you have specific questions about your homeowners insurance
Do you have Replacement Value or Actual Cash Value? This is an important question that needs to asked when determining which insurance program is right for you.
Replacement Value Insurance means that if your covered item is destroyed you will be paid the amount of money it takes to replace that item with a brand new item. There are a few caveats in each policy and you must subtract your deductible, but this is a good definition of Replacement Value.
Actual Cash Value Insurance (ACV) means that if your covered item is destroyed you will be paid the value of that item at the time of the occurrence. If your item is 10 years old the item will be depreciated accordingly and you will be paid the cash value of that item minus your deductible.
Here are two examples.
Your roof blows off of your house in a bad storm. You get an estimate of $15,000 to replace your roof.
If you have Replacement Value Insurance with a $1,000 deductible the insurance company would pay the roofing contractor $14,000 and you would pay $1,000, the amount of your deductible.
If you have ACV with a $1,000 deductible the insurance company would then do some calculations to determine the value of your roof at the time of the occurrence. If your roof is 8 years old, they would depreciate the value of your roof by 8 years. They may determine that the cash value of your roof to be $11,000. The insurance company would then pay the roofing contractor $10,000 ($11,000 minus your deductible of $1,000), and you would pay the roofing contractor the remaining $5,000.
Here’s another example
In that same scenario of the roof blowing off of your home, you have nearly all of your personal property damaged by rain water, hail damage, and wind.
If you have Replacement Value Insurance on your personal property the insurance company would calculate how much it would cost to replace the damaged personal property with new personal property of the same kind. If they determine that it is $100,000, you would be paid out that amount to replace your personal property. In this case the deductible was already paid through the roofing contractor.
If you have ACV on your personal property
the insurance company would then do some calculations to determine the cash value of your personal property at the time of the occurrence. You may only get $200 for your 10 year old couch, even though a new couch may cost $1,200. They may determine that your personal property had a cash value of $25,000 at the time of the occurrence. You would be paid out that amount to replace your personal property. Your deductible was already paid through the roofing contractor.
Summarizing these 2 example; if you had Replacement Value Insurance your insurance company would have paid out $114,000 (replacement of the roof and your personal property) and you would have had to pay out $1,000 (the amount of your deductible); and if you had ACV your insurance company would have paid out $35,000 (the ACV of the roof and your personal property minus your deductible) and you would have had to pay out $80,000 to replace your roof and personal property.
Replacement Value Insurance cost about 10% more than ACV and there are some situation where ACV is called for. Some risks may not be eligible for Replacement Value Insurance because of the condition of the property, or the nature of the risk.
There are changes taking place in the insurance industry right now that you need to be aware of. Some companies are changing the way that they pay out claims from what they may have done in the past. I am seeing deductibles increasing and policies that once had Replacement Value Insurance getting changed to ACV. Many HO3 polices have Replacement Value on the home but ACV on the personal property. Do you know what you have? 
If you are unsure, contact your agent right away.
You can also contact Bragg Insurance Agency at 317-758-5828 for a free no obligation review of any of your insurance policies.
Unfortunately none of us are going to get out of this life alive, and some of us will even die prematurely. That’s why it is so important to have the proper life insurance in place at the proper time in your life.
Life has many transitional stages, and it’s these stages that should prompt you to step back for a moment and reflect on how your untimely death would affect those around you.
Some of these transitions in life include: graduating from high school, or college; marriage; buying a home; the arrival of children; a career change; Retirement Planning, and Final Expense Planning.
Graduating college students may need a $50,000 10 year term life policy to help cover the student loans. Especially if mom and dad cosigned the loans!
Newlywed couples buying their first home may need a $250,000 30 year term policy to cover the mortgage in case anything happens to the primary bread winner.
The birth of your first child may be the perfect time to review life insurance options. Maybe for the first time you are now responsible for the care and protection of a dependent. A life insurance policy can give you that peace of mind of knowing that if you can’ t be there the child’s needs will still be provided for.
Couples planning for retirement may want to purchase an Indexed Universal Life Insurance Policy (IUL) because of the tax benefits that it provides. An IUL is also an excellent investment vehicle while it provides coverage for an unexpected death.
Life insurance shouldn’t be viewed as a product that you purchase once and then forget it. Different stages of your life require different types of life insurance. If you haven’t done so, call your agent today and schedule a time to review your life insurance needs. You will be glad that you did.
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