Choosing the Right Amount of Property Insurance

Choosing the Right Amount of Property Insurance

Primary ways insurance companies settle claims

To help understand what "amount of insurance" means to you, it helps to understand the differences in the claim settlement methods insurance companies use. You may find a company that offers you choices on how your claim will be paid. Claim settlement methods may include:

Actual Cash Value: Generally, when your policy provides this type of claim settlement, depreciation is subtracted from the cost to repair or replace your covered property with material of like kind and quality. For example, if your mobile home's roof was ruined by wind and needed to be replaced, under an Actual Cash Value policy, you would have to bear part of the cost to replace it. In addition to paying a deductible, you would also pay a cost for depreciation.

Replacement Cost: With this type of claim settlement, you will be paid to repair or replace covered property that's damaged, destroyed or stolen with new property of like kind and quality. With this coverage, there's no deduction for depreciation of damaged property if you actually replace it. For example, if wind damaged your mobile home roof, it would be replaced with a new one and you would only pay the deductible. Companies may specify that your home first meet certain age and value requirements to qualify for replacement cost settlement.

Total Loss: Your declarations page, or Page One as Foremost calls it, states an amount of insurance for your home. If you have an actual cash value policy, and your home is destroyed, you receive the depreciated amount of your home. Some companies allow you to purchase replacement cost coverage for an additional charge so you would receive the cost to replace your home with a new home. But if you have a Foremost policy with Total Loss Settlement and your home is damaged beyond reasonable repair, you get the amount of insurance listed on Page One of your policy, less any deductible that applies -- no negotiations, no hassle.

Make sure you cover your personal belongings

It's possible that you may have special insurance needs. If you’re an avid hobbyist or a collector, you may want to consider extra insurance for your collection or your hobby equipment. To do this, ask your insurance representative about additional coverage.

For example; you love photography and have lots of photo equipment that you use to pursue your hobby. You’ve collected cameras over the years and your collection would be very expensive to replace. A policy written with the insurance needs of the average person who just wants snapshots for the family album may not give you the coverage you want on your photo equipment. You should talk with your insurance representative about your options. Chances are your representative will suggest that you "schedule" your photo equipment -- that is, insure it for additional coverage by specifically listing each piece of photography equipment and insuring it for its value in today’s market.

Consider scheduling your property for a jewelry collection, or if you own furs, firearms, silverware or goldware. Collectors may want to consider the value of their collections. Things like figurines, china, glassware -- almost any other collectible -- may need to be protected with special limits of insurance.

If you own any of these items, have other collections or own other things of special value, ask your insurance representative about Scheduled Personal Property coverage.

Get adequate coverage

With both liability and special coverages, higher limits typically are available for an additional cost. Insurance companies work hard to offer their customers a good coverage package, but it’s really up to you to determine if that’s enough coverage for you. Take inventory of your personal belongings, determine their current value and what it would cost to replace them. Then talk to your insurance representative about what your policy offers and any changes you might want to make in your insurance program.

If you’re ready to find out what a Foremost policy can provide you, at what cost, click here for an Online Insurance Estimate.