Skip to main content

Replacement Value Insurance

By George Stanzan


When you own a home or something else of high dollar value, a replacement value insurance policy will pay you what it costs to replace that item in the event that it is completely destroyed. For example, if your house is declared a total loss after a fire, your replacement value insurance policy would pay to have a new one rebuilt that is constructed of exactly the same building materials and is the same physical dimensions of your old house.

Replacement Value is Not Market Value

If you are counting on replacement value insurance to pay the full value of your home in a catastrophe, it is important that you understand the difference between what it costs to replace a home verses what it would sell for in the real estate market. When market value is established for the purpose of pricing a home for sale, three important factors are taken into consideration. These are whether the home is in a location that is considered desirable, the value of the land and prices for other homes in the same area.

In contrast, the money you may receive in a replacement value insurance policy settlement considers its value based on different criteria. Some of the information that makes up a replacement value include cost of removing debris on the property, cost of building materials and providing energy, construction codes in your city, how accessible the location of your former home is and the wages paid to workers to reconstruct the home.

Another important factor to keep in mind with the replacement value insurance policy is that it is only good for the normal duration or life span of the product it is insuring. With the exception of houses, most items will have a period of time that they are expected to last. A car, for example, may only be covered for 10 years under a replacement value insurance policy, and if it finally breaks down after 15 years, your policy would not protect you from having to pay for a replacement.

Considerations When Purchasing a Replacement Value Policy

In comparison to a cash value policy, which pays only what the insured item is currently worth, a replacement value policy covers what it would cost to fully replace. This makes replacement value policies the more expensive insurance option, but one that is also a necessity to protect against extreme financial loss in the event that something happens, such as severe weather or fire, that is beyond your immediate control to guard against.

If the asset that you own would cost significantly more to replace than it is currently worth, an insurance company may refuse to sell you a policy to protect it. This would be a financial risk for the insurance company, and they need to protect their own best interests.

When you purchase a new home and buy a replacement value policy, be certain you understand what is covered. If it is only the building structure, you may need a separate policy to replace your valuables inside the home.




About the Author:



Popular posts from this blog

When Do You Need To Contact A Locksmith Gilbert AZ

By Kristen Baird When you have problems with your locks or keys, you need to contact locksmiths to help you solve the problem. A locksmith Gilbert AZ can assist you when you are stranded after a home door or car lockout. Locksmiths assist in repair of locks, rekeying, duplicating keys, and installing new locks. Upon contacting locksmiths, they respond rapidly and rush to your premises to offer their services. Today, locksmithing issues are actually an emergency. They strike when you do not expect and it can be the worst moment for you. If you have a large batch of keys, it is usually difficult to determine which keys work with which lock. You spend a lot of time trying to sort out the right key to open your doors. However, master keys can solve that problems because you can keep a few keys that open many locks. For example, you can have your main house door lock and the office door locking system opened using one key. When you move to a new area, one problem you have is ...

How To Choose A Business Lawyer Covington LA

By Janet King Running a business can be very challenging and more so as regards the legal issues involved. One of the things that any business person should strive to avoid is getting in bad books with law enforcement agencies. This is best solved by hiring a well qualified attorney who is versed with the different legal issues. When choosing a business lawyer Covington LA offers many options. There are various roles of attorneys. One of the major things that they deal with is resolution of conflicts. These are usually between the employer and other parties. The lawyer is required by law to protect their client and business even when they are on the wrong. If you are not careful, there are disputes that might end up leaving the business bankrupt. Corporate lawyers ensure that businesses grow and are safe from employees. Attorneys offer legal information to businesses. This is something they do by ensuring businesses are updated as regards all the information that is required...

Attributes Of An Accomplished Denver Family Law Lawyer

By Timothy Olson In many kinds of conflicts, lawyers are required to help represent the needs of the various parties that are involved. Such can be applicable to the various disagreements that occur in families, and attorneys are needed when resolutions need to be reached legally. There is always a prime need to get the best in the sector for the best representation. Though the lawyers may be numerous, only a few are selectable. Below are the qualities of a great Denver family law lawyer . Service pricing. This is one of the major aspects that one ought to verify when selecting an advocate. There are very many lawyers out there but all of them have the various rates that they have placed on the services that they offer. There is a great importance to always get those that have premium flat rates and do not charge on an hourly basis. They should also disclose their rates from the onset to avoid conflicts later. The experience should be very specific. This aspect mainly entails...