Home Insurance

What if my home is a total loss?

With the recent unfortunate weather events in Dayton, several of our customers have asked about what their policies cover.

There are three main types of Dwelling coverage. Actual Cash Value, Replacement Cost, and Guaranteed Replacement Cost. The “Dwelling” coverage on a policy only covers the structure. If you pick up your home and turn it upside down and shake it, everything that stays in your hand is your Dwelling, while everything that falls out is Personal Property.

Actual Cash Value – only insures your home for the actual value. This works similarly to car insurance. If your home is insured for $100,000, you’ll only get $100,000 (or less!) if it is a total loss. This is normally nowhere near enough to rebuild your home.

Replacement Cost – insures your home for $100,000 with an extension of a percentage, for example 25%, but then your coverage stops. You would be responsible for anything above the $125,000 the insurance company pays. This is the most common type of coverage.

Guaranteed Replacement Cost – covers your home for $100,000 with no cap to the coverage. With this coverage, the insurance company will pay whatever it costs to rebuild your home. No matter if it’s $250,000, $500,000, or a million dollars. This is the gold standard of insurance policies and the absolute best you can get.

You can also get Actual Cash Value or Replacement Cost on your Personal Property.

With Actual Cash Value, they would pay you the actual value of your stuff. If you have an old TV with the box out of the back, it might only be worth $25.

But if you have Replacement Cost, you would initially be paid $25, but as soon as you replace your old TV with a brand new flat screen of similar size, you would be paid for the new TV!

In order to be sure you have records you need, it’s always a good idea to walk around your home and video each room. Open closet doors, storage containers, etc. so you’ll have an idea of all of the stuff that you own. Make sure this video is backed up to an external hard drive (kept in another location!) or cloud service, this way if your computer is lost in a fire or tornado, you’ll still be able to access the video.

It’s also a good idea to digitize your important files and save them on an external hard drive or cloud service. For example, your insurance declaration pages. This way, you’ll be able to access them if you’re displaced from your home for any reason.

If you do experience a loss, you may need to write down each and every item you own. For more expensive items, you can create a spreadsheet with the make and model of the item and the serial number. If you had a camera, it would look like this:

Canon DSLR Camera, Model T3i, Serial Number XXBCA1234.
Canon 50 mm lens, Serial Number LENCAN1234

This helps the insurance company be sure you’re reimbursed correctly for more expensive items.

Curious what coverage you have on your policy? Call us today! 513-831-4544.