Market value vs. Replacement cost

The High Cost of Rebuilding

   If I bought my home for $300,000, then why do I need to insure it for $350,000? This is a very common question. It is a question I couldn't answer before I got into the insurance industry. 
   The Market Value of your home is what it costs to buy your home. That would be the $300,000 in the above example. The Replacement Cost used to determine your insurance amount is what it costs to literally rebuild your home. That would be the $350,000.  The basic issue that drives the difference between these two, is that the price of building materials and services continue to rise, while the value of real estate continues to decline.
   Many factors will affect the price of rebuilding your home. 
*The price of building materials is one. Did you know that there is a tiny bug, the mountain pine beetle, that has chewed its way through 40 million acres of timber west of the Mississippi? This has caused a lumber shortage in many areas of our county. 
*Another factor is that often, specialized workers are needed to prevent further damage in the case of a partial rebuild. 
*Building codes may been updated since your home was built. That will cost more on a rebuild. 
*There is the debris removal after a claim as well.
*Labor costs will be higher because it is more efficient to hire several crews to work on several homes (as in when building an entire neighborhood) than it is to hire one crew to work on one home. 
  If you upgrade or renovate your home, be sure to let you your insurance agent know. This can affect your replacement cost, especially if you put in hardwood floors or update the kitchen or bathrooms. Many clients don't want to make that call because increasing the replacement cost will increase your insurance premium. But it is negligible in comparison to the out of pocket costs you will forfeit when you rebuild your home without enough coverage in place. 
   You should update the replacement cost on your home every 3-5 years. What it costs to replace your home today is not what it will cost to replace your home in 5 years. The cost of rebuild fluctuates as the cost of materials and services change.

Some insurance carriers offer Actual Cash Value policies. This covers what it would cost to replace your home minus the depreciation on your home. These policies will be cheaper, but  they will not pay out the entirety of rebuilding your home. You will be out the extra money, or will have to decide to make cut backs in the rebuild.

We always suggest replacement cost. It is a little bit more money in the short term. And we all think “it will never happen to me”, but it can happen to you. And when it does, you want the right amount of coverage to protect your home.

 Thanks for Reading!
Nancy Brockman   

As always, if you have questions or concerns about your Home, Auto or Commercial insurance, please call toll free 877-987-8683 or click:  http://www.wekeepuinsured.com/

Kitchen fires

Up in Flames!

   Cooking fires are the most common causes of home fires and the injuries that follow. In no time at all, a kitchen fire can turn into an inferno, taking your home with it!
   Here are some safety tips to in place in your home.
1. Stay in the kitchen. Unattended cooking is the number one cause of kitchen fires.
2. Use a timer and check on food regularly. You want to catch it before it bubbles over onto the burner!
3. Keep the stove top clear. Dish towels or paper towels can go up without a moment's notice.
4. Dress for cooking. Long loose sleeves can get caught in a burner and catch fire.
5. Cook in a clean kitchen. Built up oils and grease are flammable. So keep that stove and stove top clean.
6 Wait for grease to cool before disposing. Tossing hot grease into your trash can can cause it to go up in flames.

   If you do have a fire, smother the pan with a lid and turn off the burner. Uncover the pan and let it cool.
If you have a fire in the oven, turn off the heat but leave the door closed.
   If the fire cannot be contained, get out of the house and call 911. Most of the kitchen fire related injuries are due to the inexperience of amateur fire fighting. Leave it to the pros!

Thanks for reading!
Nancy Brockman

 As always, if you have questions or concerns about your Home, Auto or Commercial insurance, please call toll free 877-987-8683 or click: http://www.wekeepuinsured.com/ 

                                        

Is your roof covered?

Your Roof Gives You Peace of Mind

 We saw some crazy rain in North Texas the last few days. Rain- great for flowers, not so great for roofs. Our roof protects us - from rain, snow, birds, bugs... We need that roof intact!
Many homeowners see leaks when it rains. It begins as that discoloration on your ceiling. Then it spreads and may begin to drip. That is when it is bad. That is when, more often than not, you discover you have roofing problems. Will your Home owner's insurance cover it?
   Your policy will cover replacing your roof if the damage was caused by vandalism or fire. But "acts of God" like Hurricanes and Tornadoes? Yes, usually. Now if the damage is caused by wind, rain or hail, it will most likely still be covered, but there is a special "wind/hail" deductible that applies.This deductible can vary in dollar amount or percentage of dwelling. The most common is a 1% deductible, but many companies start at 2%. Remember- the higher the deductible, the lower your premium, but the higher your out of pocket cost in the event of a claim.
   Some policies will only cover the Actual Cash Value of your roof. That means they will pay what your roof is actually worth. This includes Depreciation. The older your roof, the more depreciation of course. Many policies have an option to cover your home at Replacement Cost. This doesn't take Depreciation into account. This is the type of coverage I would strongly suggest you make sure you have. ACV will not cover the cost of replacing your 10 year old roof with a brand new roof. Replacement cost will cover the cost of replacing the roof at today's cost.
   Do you know what type of policy you have? Please contact your Insurance Agent (that is what we are here for!) and make sure you understand your coverage. Our roof offers protection. And our Insurance protects our roof. Know how well it will protect you.

Thanks for Reading!
Nancy Brockman

As always, if you have questions or concerns about your Home, Auto or Commercial insurance, please call toll free 877-987-8683 or click: http://www.wekeepuinsured.com/

                                         

Insuring a Home Based Business

Will your Homeowner's insurance policy cover your Home based business?

   In a word, NO! Homeowners insurance was never designed to cover business risks. There is a cap on most home policies, limiting the amount of coverage on computers, tools and office furniture- desks, filing cabinets and such. Your home policy will not provide any type of Liability for your business. Most carriers will ask if there is a home-based business on the application. If there is, they will exclude it - in writing.

   There are said to be over 38 million in the US alone. These at home businesses bring in over $400 billion per year now. 
   If you are one of these at home business owners, you need to be aware of how protect yourself and your business. There are many pieces to the commercial insurance puzzle. They may or may not all apply to you. But you must make sure. Being improperly insured is a risk you cannot afford to take with your business.
1. Business Property Insurance will cover your electronics, office furniture, printer and such. Many policies offer the choice between Actual Cash Value (ACV) or Replacement Cost (RC). The difference  is ACV will take depreciation off of the value of the item. RC will pay out what it costs to actually replace the item today. ACV will be a lower premium, but you will pay much more in the case of a loss and you have to replace your items.
2. Liability will cover you if you are found liable for damages to someone or their property. If you have anyone- customers, vendors or even delivery people- come to your home to conduct business, you need Liability coverage. Your Homeowner's liability will not cover this.
3. Professional Liability or Acts coverage will cover you against any negligence claims made by clients. This is very important for any one providing service or professional advice.
4. Product Liability covers you if you are liable for damages caused by a product you designed, manufactured or supplied.
5. Business Auto will cover you in the case of a claim for your auto while being used for business. Your personal auto policy will not cover claims caused during the course of doing business.

Some companies are beginning to offer some of these coverages as endorsements onto Homeowners policies. Others offer both the Home and the business insurance as a package. Call your agent (that is what we are here for!) and make sure you put the right policy with the right coverage in place for your Home based business.

Thanks for reading!
Nancy Brockman

Please call us with any questions or quoting needs!   toll free 877-987-8683 or click:

The Brockman Agency

Insuring Jewelry

Should I Insure my Jewelry?

   Did you get a shiny, new bauble for Christmas? Or are you January baby, with a new Garnet gemstone ring or necklace? Should you worry about insuring your new item?
   Most basic Homeowners policies will cover up to $1500 in jewelry. I don't know about you, but that would cover most of my jewelry. But that is the total amount for the policy. It isn't what can be paid out for each piece. So, in my case, I have my wedding rings "scheduled out" separately on my Homeowners policy. This means if my covered rings are lost or stolen, I will receive compensation for the Appraised  amount, without diminishing the amount of my basic jewelry coverage. 
   This is the entire reason to have insurance in the first place. It is meant to "make you whole" again in the event of a loss. Your jewelry counts as a loss. But you need to make sure you have the right coverage. Check your Home policy. If you have just the basic coverage, again- it will cover up to $1500 on most policies. Some have what is called a Blanket endorsement, sometimes up to $50,000 for special valuables. But even these will only pay out up to $10,000 for one item. This may be adequate for many people. But is it for you?
   Talk with your Insurance Agent (that is what they are there for!) about the possibility of Scheduling certain valuables on your Homeowners policy. It will entail providing a Certified Appraisal for covered items and paying extra premium. The extra premium isn't too much depending on the amount you are scheduling out. But know your choices so you can make an INFORMED decision!
Thanks for reading!
Nancy Brockman

If you have questions about your Home, Auto or Commercial Insurance,
please call toll free 877-987-8683 or click The Brockman Agency