Will Your Home Insurance Cover a Total Loss?

Do you have enough coverage in your home insurance policy to cover a total loss? Do you have the right coverage? The answer to these two questions may never be known until you experience a situation like over 100 homeowners did after Christmas when tornadoes rumbled through Red Oak, Garland, and Rowlett. Over 1,200 homes and businesses were damaged or destroyed by 11 tornadoes which ransacked parts of north Texas on December 26th.

No one actually believes they’ll suffer a major or total loss. Less than 5% of all homeowners do, however if that happens to you, you want to know you’re home policy will properly cover you. Here are three items to review on your home insurance policy now to determine whether you have enough and the right coverage to weather a major or total loss.

Dwelling Coverage: The amount of insurance coverage on your home is what is referred to as dwelling coverage. It should be enough to replace your home (this includes demolition, debris removal, and rebuilding your home) if you experience a total loss. Most home insurance companies who are currently writing policies in north Texas, start with a minimum of $100 per square foot of dwelling coverage. Many start in the $110 to $120 a square foot range.

To determine what your amount of coverage is, take the dwelling amount and divide it by the total square feet within your home. That number will tell you what your home is insured for per square foot. If it’s less than $100 consider increasing it to properly cover your home.

Extended Replacement Cost: This is optional coverage available on many home insurance policies. It provides additional dwelling coverage that may be needed when there is a total or major loss and the cost of repairs or rebuilding the home exceeds the amount of dwelling coverage. Extended replacement cost comes in handy when many homes are affected at one time and in the same geographic area. It’s not uncommon in these instances for the cost for materials to soar.

Most companies provide either an option for 25% or 50% extended replacement cost. The cost for this option varies by carrier, but usually runs between $30 and $80 per year to include. This option is designed to help rebuild the home on an as is basis, not for “upgrades.”

Loss of Use: Can you imagine how difficult it could be to make house payments and pay for rent on an apartment or home while your home is being rebuilt? Most people can’t afford to do that which is why loss of use is usually included on many home insurance policies. Loss of use provides policy holders to rent a motel room for a few nights or weeks, or an apartment or home if a longer stay is needed while the home is being repaired or rebuilt. If it’s not included on yours, you should consider adding it to your existing policy.

Experiencing a major claim or total loss can be an emotionally devastating experience. Having enough and the right kind of coverage makes it easier to come back from such a loss. Take 5 minutes to check the declaration pages of your current policy for these three items now. Better to know an adjustment is needed now rather than later. There are over 1,200 property owners who can’t make any changes and must hope they have enough and the right kind of insurance. Share your questions comments, and experiences with me on our Google +, Facebook, and LinkedIn pages. I’d love to hear from you!

Evie Wise
Evie Wise


Evie Wise
Evie Wise

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