Underinsured Homes Due to Low Market Value
In the recent years there has been a significant change in the average cost of a home purchase. Home prices have been declining for over two years and consumers are able to buy homes at a significantly lower rate than they previously could.
When insuring a home it is crucial that the home is insured to the amount that it would cost to rebuild the home. The actual purchase price should not be taken into consideration whatsoever. The amount of coverage needed on homeowners insurance policy should be calculated exclusively based upon the amount of cost associated with building a home.
When there is a total loss of a home due to fire, the home will need to be completely rebuilt. The insurance company will only be able to provide the amount of coverage listed on a policy. Homeowners will not have the opportunity to cash out the policy and purchase a different home. Many homeowners are not aware that they will not be able to cash out and request a lower amount of coverage.
Due to the low value of homes and the currently low purchase prices, many homes are significantly underinsured. When working with an agent, homeowners should make sure that the coverage listed on the policy is at least the going rate for home construction.
Many homes are selling in the northern California area for approximately $80 or less per square foot. The average cost in this area to rebuild a home is $150 per square foot. Although consumers may be able to purchase a 2000 square foot home for $160,000 it is advised that the home is insured to approximately $300.000.
It is important for consumers to speak with a licensed insurance agent to ensure that the coverage listed on their homeowner insurance policy is going to be enough to rebuild their home in the event of a total loss.
When insuring a home it is crucial that the home is insured to the amount that it would cost to rebuild the home. The actual purchase price should not be taken into consideration whatsoever. The amount of coverage needed on homeowners insurance policy should be calculated exclusively based upon the amount of cost associated with building a home.
When there is a total loss of a home due to fire, the home will need to be completely rebuilt. The insurance company will only be able to provide the amount of coverage listed on a policy. Homeowners will not have the opportunity to cash out the policy and purchase a different home. Many homeowners are not aware that they will not be able to cash out and request a lower amount of coverage.
Due to the low value of homes and the currently low purchase prices, many homes are significantly underinsured. When working with an agent, homeowners should make sure that the coverage listed on the policy is at least the going rate for home construction.
Many homes are selling in the northern California area for approximately $80 or less per square foot. The average cost in this area to rebuild a home is $150 per square foot. Although consumers may be able to purchase a 2000 square foot home for $160,000 it is advised that the home is insured to approximately $300.000.
It is important for consumers to speak with a licensed insurance agent to ensure that the coverage listed on their homeowner insurance policy is going to be enough to rebuild their home in the event of a total loss.