blrman07 wrote:................... You specify the limit and in the event of a total loss, that's what you get no matter what it would take for you to rebuild your home.
New Beginning Church
Technically correct, but dangerous advice if someone doesn't understand how P&C works.
A short primer:
Note: Insurance is regulated by the state. This is just general info, not state specific and certainly not advice. Use what I tell you to open up a conversation with your own insurance agent or other adviser. Repeat, this is not advice of any sort!
If you insure your home for more than it is worth they will only pay to value. They will not pay the full amount of your policy limit since your loss couldn't possibly be that much. Insurance will indemnify, nothing more. Buying excess insurance is a waste of money.
Your home should be insured for at least 80% of value not including land. If you choose to insure for less than 80% you become a co-insurer. What does that mean, you ask? In the event of a total loss your insurance company will pay the insured amount. However
, in the event of a partial loss co-insurance will be applied. If you only insure your house for 60% of value they will only pay 60% of the claim minus the deductible. For example, your $250,000 home is insured for 60% of value or $150,000, you have a $50,000 loss caused by a covered peril (that's another conversation) the insurance company will pay 60% of the covered loss or $30,000 minus the deductible. The remaining $20,000 is covered by the co-insurer. That would be you. Always insure for at least 80% of value and verify the value every year.
Now about Coverage C, which is covered personal property. 99.9% of the people have ACV or Actual Cash Value. (BTW, I'm in the 0.01%) That means they will pay you what your used stuff is worth today. Used furniture, clothes, appliances or electronics is not worth much compared to what it costs to actually replace them with brand new stuff of like kind and quality. For a small additional premium you can get Replacement coverage on personal property. In that case, at the time of loss they pay you ACV, then you have a specified period of time to replace your stuff, send in the receipts and be reimbursed for the difference.
Hope this helps.