Replacement Cost Home Insurance or Cash Value Home Insurance? Which is Better

It’s not uncommon for first-time homebuyers, in a rush to meet their closing date, purchase a home insurance policy without reading the fine print. And an unfortunate few find out the hard way that they do not have the coverage they believed they had. Sometimes it takes a natural disaster like a tornado to teach them that although they are covered for damage resulting from the wind, they will receive nothing for flood damage since they do not have flood insurance. In other instances, they find out they are covered, but the coverage is not sufficient to pay for the cost of repairing the damage. 

While it is not possible to travel back in time to change their decision, they can make a better choice when it’s time to renew their policy. In the first instance, the answer is clearcut. They need to buy flood insurance. The second calls for some research and a bit of number crunching. Possible options are to purchase a

  •  Replacement cost home insurance policy
  •  Cash value home insurance policy.

In either case, their aim should be to make sure the new policy will provide a payout sufficient to cover or come near to covering, the cost of repairing or rebuilding a house here in the West Bloomfield, MI area.

Actual Cash Value Home Insurance?

This type of home insurance is cheaper but it takes into account the amount the home and its contents has depreciated in value since the date the policy goes into effect, before determining the amount of the payout. For this reason, it is also known as market rate insurance. This will especially impact the money they will get for household items like furniture.  The bottom line here is if the cost of construction and repair combined with replacement costs of household goods amounts to more than the policy’s value,  the homeowner will have to pay the balance of the costs out-of-pocket, and this may involve taking out a home equity or other type of loan.

Replacement Cost Home Insurance?

This type of policy will pay claims based on the actual cost of repairing, rebuilding, and replacing at the time the house sustains the damage. Many of our Agency Advantage Insurance clients who have switched to Replacement Cost Home insurance policies report that, although it is a bit more expensive than cash value home insurance,  it covered more of the repair or replacement costs than the cash value did.

Homeowners who live in West Bloomfield, MI, or any other area in the Metro Detroit area can always visit  Agency Advantage Insurance for a personalized comparison of these two types of insurance so they can make an informed decision.



Does Home Insurance Cover Damage From Fallen Trees?

It is important to have home insurance to protect you from a variety of potential events that can otherwise cause a severe financial impact on you and your family. Many homes are susceptible to damage from a fallen tree. This can happen as a result of disease, pests, or even storms. It is important to know if you are covered in the event a tree falls and creates damage that allows water and moisture to leak into the home. 

Water Damage From Fallen Trees

If your home suffers damage as a result of a fallen tree, most home insurance policies will cover the damage. Not all policies are the same, so it is important to understand the terms and conditions outlined with regards to water damage. There are some policies that will only cover the damages up to a certain amount. If you have limited coverage with regards to water damage, it is important to discuss your other options for a more complete coverage with your insurance agent.

Finding the Right Policy

Finding the right amount of insurance to adequately cover your residence from potential damage is key to protecting your financial future. Work with an insurance company in West Bloomfield, MI like Agency Advantage Insurance to help get the security you need. We have knowledgeable insurance representatives who know how to work with your budget and your special circumstances. 

If you live in or near West Bloomfield, MI, you should call or stop by Agency Advantage Insurance and discover the coverage options we have that can protect your home from water damage as a result of fallen trees and other hazards. Don’t take chances with your home or your future. Get the coverage you need for peace of mind. 

What Is A Video Inventory and How Is It Beneficial?

Agency Advantage Insurance serves residents living in and around the West Bloomfield, MI area. Insurance agents understand that people want to save money whenever possible, so they offer simple ways to keep premiums affordable. A common way of accomplishing this is to verify your assets through a video inventory. 

What Is A Video Inventory?

A video inventory is an accurate and up to date list of all of your valuable possessions. You can create a video of your home that shows in detail the condition of your furniture and other valuable items. If you plan to take a video record of your electronics, make sure to include a small amount of footage that includes the serial number and model number if it has one. Taking a video of your home gives insurance agents an idea of the value of the contents of your home. This ensures you have the right amount of coverage in case of a fire or other type of emergency.

How Do Insurance Companies Use Them?

Insurance companies use video inventories to verify the condition of your property. In most cases, your insurance agent will ask you to update your video every two or three years, especially if you replace items or if the condition of an item has changed over time. Any new items should be added to your inventory as soon as possible to maintain accuracy.

The agents of Agency Advantage Insurance encourage the residents of West Bloomfield, MI to consider making a video recording of their home and the possessions they own. Verifying the value of your items with a video ensures that you have the right amount of coverage on your property. Reach out to our agents for more information.

5 Mistakes To Avoid When Buying Home Insurance

When buying coverage, making a mistake can be quite costly in the long run, particularly with home insurance. Moreover, a home is considered a prized possession for the residents of West Bloomfield, MI. On that note, it is best to plan cautiously to avoid the mistakes.

Opting to Go With Just The Basics

One could easily think that the basic home insurance policy will protect you from every risk that can potentially damage your house. It’s true that some of these policies will cover you to a great extent, but it’s wise to consider your overall situation like the possibility of natural hazards occurring.

Underinsuring Your Home

It’s possible to underestimate or overestimate the amount of content coverage required, or confusing the replacement cost of your home with its market value. To better determine how much dwelling coverage is sufficient for your policy, you’ll need to discuss the details of your home with an Agency Advantage Insurance agent in West Bloomfield, MI.

Not Shopping Around

There are a number of insurance providers that offer a wide array of policies which vary greatly when it comes to premiums and terms. It is therefore wise to inquire from many carriers so as to get a suitable home insurance which is tailor-made to suit your specific needs.

Not Updating Your Policy

Several people avoid informing their insurer about new adjustments made to their homes. Consequently, this can have detrimental effects on you as it can lead to a serious risk in the long run. To be on the safer side, it’s best to let the insurer know about every change you’ll make in your house. You can also hold an annual review with your agent to discuss any additions made to your home.

Thinking that a basic policy will insure against sewage problems or mold

It’s worth noting that a number of policies don’t offer cover against sewage backup or mold problems.

Call Agency Advantage Insurance today to find out more on how you can get the most out of your home insurance. Also, try our online rating tool for quotes on home and auto insurance from home.