Homeowners Insurance Buying Tips

Insurance has, like most industries, undergone big changes in the past decade.  At times it seems too confusing to keep up with.  Understanding your type of coverage is very important.

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It is always tempting to take the lowest price offered for something that appears to be the same. This could be a big mistake when it comes to your homeowners insurance.  Be sure you understand your coverage when shopping rates.

There are essentially three levels of coverage:

• Actual cash value - This value covers the house plus the value of your belongings after deducting depreciation (i.e., how much the items are currently worth, not how much you paid for them).


• Replacement cost - This is the actual cash value without the deduction for depreciation, so you would be able to repair or rebuild your home up to the original value.


• Guaranteed (or extended) replacement cost - The most comprehensive, this inflation-buffer pays for whatever it costs to repair or build your home - even if it's more than your policy limit! Certain insurers offer extended replacement, meaning it offers more coverage than you purchased, but there is a ceiling; typically, it is 20-25% higher than the limit.

Also don't forget that the value of the land is rarely included in insurance policies. You have to have special insurance if for some reason you think that you might sustain a loss to the actual land your property sits on. If this is a reality for you the insurance rates will probably be very high. One example is flood insurance which has increased quite a bit in the last ten years.

Be sure you are asking the right questions and comparing apples to apples when shopping for insurance rates. If you need a good agent in the Palm Springs Area please feel free to contact me