June 19, 2012

Replacement Cost vs. Actual Cash Value

Now is a good time to take your homeowner's insurance policy to your local insurance agent to review the types of coverage that you have. Ask your insurance agent whether or not your policy recovers the cost of "replacing" your possessions or provides "actual cash value." Most people prefer "replacement cost" coverage because it pays more than "actual cash value." Simply put, "replacement cost" compensates you for the actual cost of replacing the damaged or stolen property. "Actual cash value" is determined by taking the replacement cost minus any depreciation. Basically, "actual cash value" is the value of the item if you sold it in the marketplace. I'll use a "stolen t.v." as a simple example of the difference between the two types of coverage: under "replacement cost" the insurance carrier will likely ask you to go price a replacement t.v. of like kind (and pay you that amount)--under "actual cash value" the insurance carrier will take the replacement cost (the price of a new t.v.) less depreciation (i.e. wear and tear on the t.v.).

Ultimately, If you have to pay an added premium to get replacement cost—ask your local agent if that option is available—and pay the extra money if you can afford it.

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June 14, 2012

Inventory list now -- not after the storm

Before we get too far into hurricane season, it is a good idea for you to make an inventory of your possessions. If you do not have the time, you can take a video camera and do "walk-through" of your home. Video all the rooms and the possessions you have within the rooms. If you have receipts for the high-priced items in your house (like a flat-screen TV, computer, washing machine / dryer, or other appliances), keep them in a safe place so that you can have them available if you need to present evidence of the value of those items at a later date.

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June 13, 2012

Homeowners insurance vs Flood insurance

A lot of folks do not realize that their homeowner’s policy will not cover a loss due to a flood event. As a homeowner in Mobile or Baldwin County, you need to consider whether or not you need a flood policy in addition to your standard homeowner’s policy. The cost of flood insurance is a lot more reasonable than you think—so if you live in an area that is prone to flooding talk with your local insurance agent about purchasing a flood policy. Some people are misinformed and believe that they must live in a designated flood zone in order to qualify to purchase flood insurance—that is simply not true. I personally do not live in a flood zone but I carry flood insurance for added protection—and it’s very affordable. Please know that there is a thirty (30) day waiting period to get flood insurance once you’ve placed your order, so if you’re going to make that decision, you need to make it soon considering that we are now within the Hurricane season.

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