When it comes to making financial decisions, many of us may take actions that save us a significant sum up front while ignoring the potential long-term effects of those actions. A prime example occurs with homeowner’s insurance. Many insurance companies offer inexpensive policies and tempting discounts to entice customers to choose them over a competitor. What many homeowners may not realize is that accepting significant discounts and settling for inexpensive policies may cause them to incur more costs down the road.
Why Spend More on Homeowner’s Insurance?
Living in Vero Beach exposes your home to dozens of predicaments that can destroy it and everything it holds. Hurricanes, tropical storms, flooding, falling trees, and burst water pipes can cause damage when you least expect it. Homeowners who cannot afford large-scale repairs on a whim must select a strong insurance policy that supports the cost of repairing and replacing items rather than a policy that reimburses the property’s value.
Replacement Costs vs. Actual Cash Value
Most policies cover homes and personal property for actual cash value, or ACV. The value is based on what the items would be worth today, taking into account depreciation. If your roof is twelve years old, for example, a policy based on ACV will pay you what your roof is worth today, rather than what it will cost to repair your roof, should your roof sustain significant damage.
Insuring the full cost of repairing or replacing property requires a high-end insurance policy that can cost 10-20% more than one based on ACV. Yet this surcharge will pay for itself when you find yourself needing to repair or replace valuable items. Insurance experts generally recommend replacement cost policies because they will help you get to where you were before the accident more quickly by providing the funds you need to do so. If your twelve-year-old roof is damaged after a storm, you will receive a check for the value of your twelve-year-old roof under an ACV policy, which will be significantly less than the cost of repairing or replacing that roof.
Beware of Enticing Discounts
Insurance companies also offer enticing discounts to keep their policyholders’ loyalty. You may have learned of such discounts when the time came to renew your policy. An example of such a discount could be a roof exclusion endorsement. While this discount could save you hundreds or thousands of dollars on your premium, it could cost exponentially more should you ever need your roof repaired or replaced.
A roof exclusion endorsement in your policy makes it so that your insurance company is not required to pay for repairing or replacing your roof after a wind or hail event. Wind events sometimes include hurricanes like the recent string of storms that caused massive devastation in Florida and other parts of the U.S. Although the roof can be the costliest part of a home to repair after a storm, many homeowners take the bait to save a few hundred dollars up front. They may not even realize that property damaged inside the home due to a leaky roof would also be excluded from the policy.
Homeowners who invest in better coverage could still face several roadblocks during the claims process. Vero Beach property insurance attorney William Terry has over 25 years of experience representing homeowners against powerful insurance companies. He represents those whose claims have been wrongfully denied and those whose claims have not been paid fully or fairly. Do not accept the first settlement offer or a claim denial; contact (772) 217-6600 or contact Willam Terry, P.A. online for a free review of your claim.