Keep posted, keep informed.
For homeowners in certain parts of the United States, the 2010s were marred by one disaster after another. Floods, tornadoes, hurricanes, wildfires, and major storms all played a role in the lives of millions from coast to coast. This means that those in the homeowners insurance industry found themselves busier than usual, taking care of claims and helping their clients pick up where they left off.
With a new year upon us, it’s the perfect time of year for personal lines insurance wholesalers to sit down with their clients and review their coverage in hopes of preparing them as much as they can before the storms start to swell.
Here are some homeowners insurance features to go over with Personal Lines insurance clients.
Most homeowners insurance policies cover the structure of the home, but there’s still specific information that needs to be discussed in order to understand how much homeowners will actually be reimbursed for if their house is destroyed.
Policies outline their hazard coverage limits under three different terms and the payout that is scheduled under each term can make a big difference to homeowners with coverage.
First, there’s the actual cash value, or ACV, which is Replacement Cost of the home minus depreciation. It’s possible that the value of land that a home sits on may have increased since it was purchased by the homeowner. But over time, items like plumbing, floorboards, ceilings, and wiring have aged, therefore taking away from the home’s overall value.
Next is replacement cost value, or RCV, which is the amount it will cost to rebuild a house at the current prices for labor and materials. This kind of policy limit will come with higher premiums than one that covers only the ACV listed above, but it will provide a high amount of additional reimbursement if the homeowner needs to replace all or some of their home.
Lastly, there’s guaranteed replacement cost, or GRC, which is similar to the RCV, but with a guarantee that an insurance company will pay a certain percentage past the policy’s limits to rebuild the home. This is usually relevant if a regional disaster, like a major storm, drives up the cost of labor and building materials temporarily.
If someone who carries ACV coverage loses their entire home in a flood or fire, they would likely pay tens of thousands of dollars out of their own bank account to rebuild. For those who don’t have the kind of coverage that doesn’t pay the full cost of replacing their home following a disaster, they should consider increasing their policy limits.
About Mavon Insurance
At Mavon Insurance, we pride ourselves on our unique approach to insurance. We focus on integrity, communication, professionalism, respect, and gratitude to help our clients succeed and place business in specialized markets. For more information about our products or to become an agent, please contact us today at (855) 248-1480.