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by Guest Author on Jan 23, 2012

Purchasing a home is one of the smartest investments you can make, one that requires a great deal of time and research.  New Homeowners have to consider a number of factors:  Location, school zones, inspections.  As important as all these are however, your Home insurance policy is as if not more important.  Without the proper home owners insurance, if something should happen to your new home, all the time spent is for nothing.

It is important then to understand the endorsements and coverage offered by insurance companies on their home insurance quotes.  

The first coverage to look at is Dwelling.  Dwelling coverage protects the actual structure of your house: the roof, walls, floors, anything that is built as part of the house.  For instance, if you were to suffer hail damage in one of the hailstorms that can be prevalent in such Texas cities as: McKinney, Dallas, Plano, Keller, Grapevine, Allen, Frisco, or any other city in the DFW area, Dwelling coverage would insure you from the roof damage that often comes with these storms.

Dwelling coverage can either be actual cash value, or replacement cost.  It is important to know the difference between these when you are obtaining a free insurance quote.  

Actual cash value offers a dwelling coverage that takes into account depreciation of the property.  If a loss occurs to the home, then the insurance company will pay to rebuild the home to any depreciated value.  Due to this factor, I don’t recommend purchasing a home insurance quote that is actual cash value.

Replacement cost is superior coverage.  With Replacement cost, if a house suffers a total loss, the property will be rebuilt according to the agreed upon cost.  So if your house should depreciate in value, it will still be rebuilt according to the agreed upon price. 

Here is an example of what I am talking about:  A customer of our agency lives in Mckinney, Texas, and has a homeowners policy with a major insurance company such as Safeco, or Travelers.  This customer,  suffers a major loss to his roof in a hail storm.  His roof is 8 years old, and has depreciated in value, however since his policy is for replacement value he will receive full payment for his claim less the deductible.  If this customer had his policy at actual cash value, he would have received payment for the claim factoring in for that depreciation.

Next week, we’ll look into some of the other aspects of Dwelling Coverage that every Homeowner should know before they purchase an insurance quote.

Until then, if you’re looking for information you can find us on Facebook, or email us at .  If you’re ready for a free insurance quote, you can submit your information on our home page, or call us at 214-733-8400.

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