The recent slew of severe weather has most of us thinking about one thing: our homes. We’re contemplating what we would do if something were to happen to our homes. We’re wondering what our homeowners insurance would cover.
In Texas, homeowners insurance typically is one of two types: HOA and HOB. HOA offers basic protection and is sometimes referred to as a Basic Named Perils Policy. HOA only covers your home and a limited number of specific perils. HOB provides more coverage. It protects your home against anything and everything except for items listed as excluded events. It also protects the contents of your home. Those contents, unlike your home, are only covered under certain conditions.
Understanding which policy you have is only the beginning. You must also discover what kind of coverage it provides. Coverage usually falls into three categories:
- Replacement cost covers the cost of repairing or replacing your home based on a set dollar limit.
- Extended replacement cost covers the replacement cost, but the insurer will pay a certain percentage above that cost to account for inflation.
- Guaranteed replacement cost covers the total cost of your replacing your home, regardless of increases in prices. This particular coverage is becoming increasingly rare as insurers attempt to control their costs.
Your belongings, too, receive different types of coverage. Usually, the coverage is either actual cash value or replacement cost. Actual cash value only pays for the actual cost of the lost item. If you were to lose your five-year-old laptop, your payout would be based on the value of a five-year-old laptop. Replacement cost, in contrast, pays for the cost of purchasing a brand-new laptop.
Do you know what’s in your homeowners insurance policy? Maybe it’s time to review it and to ensure that you have the coverage you need. Why not call Flor & Associates Insurance Agency today? They would be happy to help you assess your homeowners insurance policy.