Cash Value Homeowners Insurance

Protecting your home can be costly. An affordable cash-value policy may be worth consideration if you are worried about expensive premiums.

All homeowner policies automatically cover household contents, but how contents are covered can widely vary depending on the type of policy. If you purchase a cash-value homeowners policy, this means when you file a claim, your lost, stolen or damaged items are paid out at a depreciated value. For example, if your TV originally cost $1,000 but at the time of the claim it is five years old and now worth only $500, your policy will only pay out $500. welcome mat outside front door of a house

welcome mat outside front door of a house

On the other hand, a replacement-cost policy would pay for the cost of a new TV similar to the one that was stolen or damaged. You would get the full $1,000 back in the event of a loss, but at a cost of higher monthly premiums.

Depending on your situation, replacement-cost coverage can be affordable. However, cash-value may be a better option for homeowners on a budget. In fact, experts estimate that opting for replacement-cost coverage over a cash-value policy could cost you up to 15 percent more each month in premiums.

A cash-value policy still gives you peace of mind by adequately insuring your home and its contents in case of a loss, and it also offers the benefit of lower monthly premiums.

Cash-value Policy Considerations

To better understand the type of homeowners policy you need, carefully analyze your home and possessions.

Any kind of homeowners policy covers household contents to some extent, but you won’t know how much—or what kind—of coverage you need until you know what you have. Follow these tips to analyze your homeowners coverage needs.

Inventory 101 for Homeowners

Make an itemized list of everything that could possibly be damaged, lost or stolen in an incident, disaster or accident. This should include household furnishings, equipment and any other personal possessions.
Clearly identify items by providing a brand name (if applicable), serial/identification number and detailed description, including color, size, style, features and unique characteristics. If possible, also include the date they were purchased or acquired—and the purchase price.This is especially important if you have a cash-value policy.
Keep your inventory listed up-to-date. A good rule of thumb is at least every six months or if you are purchasing something expensive or making a large change.
Keep multiple copies of your list. Keep one inside and one outside your home in case of disaster (e.g., safe deposit box at bank).

Do Your Research
When purchasing a house, it is not just the cost of the house but also the amount you will pay for insurance. Many homeowners forget coverages that may not be included in a standard policy, such as flood and earthquake damage.

Review the Comprehensive Loss Underwriting Exchange (CLUE) report of the home to help you evaluate some of the problems the house may have. If coverage is costly, consider a more budget-friendly cash-value policy.

What Affects Home Insurance Prices?

Type of Construction: Certain building materials make the house less disaster-prone than others.
Age of House: Newer homes may qualify for discounts.
Disaster Resources: The proximity of help and disaster relief resources to your home affect your rates.

Disclaimer: This blog is provided for informational purposes only. The information provided herein is not intended to be exhaustive, nor should it be construed as advice regarding coverage. Eligibility for coverage is not guaranteed and all coverages are limited to the terms and conditions contained in the applicable policy.

Cash Value Homeowners Insurance

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