Things to Look for in Home Owner’s Insurance Coverage

New Mexico Home InsuranceFor those of you who are looking for home owners there are a few things that you do not want to go without.
First and foremost you want to make sure you have is adequate dwelling coverage. Never insure your home for less than 80% of it’s value. The reason for that is the co-insurance clause. The co-insurance clause states that if you insure your home for less than 80% of it’s value then the insurance company will only pay for the same percentage of the claim that the home to value was insured at. Let me explain. Say you have a home valued at $150,000 and you only get coverage for 50% of it’s value, that would mean that you purchased $75,000 of dwelling coverage. If you have damages that total $30,000 the insurance company is only going to give you $15,000 to help repair it, or 50% of the claim amount the same percentage that you insured your home for. Who has $15,000 just laying around to pay the other half of the damages? 80% is the magic number when it comes to insuring your home, but don’t stop there because item number 2 in coming right up.
Another thing you want to look for in a home owners policy is replacement cost value on your dwelling and on your personal property. If something catastrophic happens and your home is ruined, along with every other home within a ten mile radius, the cost of replacing your home is going to go up due to the shortage of building supplies and contractors. It’s ideal to have replacement cost value on your home of either 110%, 125%, or 150%, that way you are covered for any additional costs that may arise. Take special note of your personal property coverage the words you want to avoid seeing on your policy are comprehensive. Now, let me be clear if your policy states comprehensive personal effects coverage followed by replacement cost coverage on personal effects – that is ok. If you have comprehensive only and do not have replacement cost value then you are only going to get paid for what your personal property is worth today, not the day you purchased it. So a computer that you paid $2,000 for three months ago is only worth maybe $500 today. You want to get the $2,000 so you can purchase another computer instead of having to come up with another $1,500 yourself.
The other thing that you are going to want on your home owners insurance is loss of use coverage. Say something happens to your house and it is no longer habitable until some repairs are made. What are you going to do for renting a room or another home while yours gets fixed? If you have loss of use coverage, your insurance company will pay your rent until your home is livable again. Depending on the damages, that could take anywhere from a couple of weeks to a year.
I hope that I have helped you figure out what you want and need in a home owners policy. More is always best, you do not want to skimp when it comes to your home and your possessions.


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