When shopping for home insurance, it is important to understand the terminology, and to make choices that reflect your real needs. The professionals at McClure Capital Inc. in Addison, TX can help you sort through the maze.
Replacement cost and market value are words you will hear, and they are important because that is the basis for determining the value of your property if you have a loss. As the words imply, replacement cost is what it will cost in today’s dollars to replace something that is insured. The market value, of course, is what the property was worth when it was damaged or destroyed.
Replacement cost is more expensive because it will cost more to replace items in most cases. Replacement cost is also more easily defined as you can easily check prices. So one question becomes whether you want to save some money on your insurance premiums. Saving on premiums is one thing, but it is a good idea to take a look at the overall picture.
On the structure of your home itself, the fair market value would probably be best as most houses increase in value. The cost of construction changes often, but prices generally go up. One consideration though would be the materials used. Hand plastering done in the early 1900s would be incredibly expensive today, for example, and might not be worth it.
The contents of your home might be better with a replacement cost policy because items inside tend to lose value over time. It is a balance you must seek in working out what kind of policy you need. This is why it is a good idea to get in touch with professional insurance agents like McClure Capital Inc. in Addison, TX to make sure you have the coverage you need.