Izzy’s Personal Homeowners Insurance Assessment

Great Job, You're Right!

Your prior claim history (or lack thereof) will be considered when a company is rating your policy. It may even prevent your current company from continuing coverage, should you have too many claims in a short period of time. Even if you are purchasing a new home, the insurance company will look back on your history for the past 3 years to validate you aren't high risk.

That's incorrect, but let us explain:

Your prior claim history (or lack thereof) will be considered when a company is rating your policy. It may even prevent your current company from continuing coverage, should you have too many claims in a short period of time. Even if you are purchasing a new home, the insurance company will look back on your history for the past 3 years to validate you aren't high risk.

Not sure, no problem, let us explain:

Your prior claim history (or lack thereof) will be considered when a company is rating your policy. It may even prevent your current company from continuing coverage, should you have too many claims in a short period of time. Even if you are purchasing a new home, the insurance company will look back on your history for the past 3 years to validate you aren't high risk.

IZZY SAVINGS TIP:

The best way to prevent increases in premium due to claims is to really take a moment to decide whether it is worth it to put in a claim at the time of loss. You should be taking deductibles that are as high as you can afford, and absorb the smaller claims out of your own pocket. This will keep your premiums low year after year.

I know, I know, "But Isn't That What Insurance Is For?" While insurance is there to make you whole, it was really designed to prevent financial destruction, as an emergency for those large catastrophic losses causing you to go bankrupt. Don't use the company for claims like you would a maintenance contract.

Depending on your specific policy, you could be right or wrong. Most policies are written on a replacement cost basis, but it's possible you could have Actual Cash Value.

Not sure? No problem: You could have either option on your policy. Most policies are written on a replacement cost basis, but it's possible you could have Actual Cash Value.

IZZY QUICK TIP - Replacement Cost:

The majority of homeowner's policies are on a replacement cost basis for your building and property, meaning the loss will be settled without depreciation. When you have replacement cost, companies will require you carry coverage that is 100% to value. They will do an estimation based on the features and square footage of your home. This may have a direct effect on your premium, as you will be forced carry more coverage.

IZZY QUICK TIP - Actual Cash Value:

Actual Cash Value is generally an option for you, but this type of settlement will result in a value with depreciation. Your claim payment will be much lower than if you had replacement cost. For example: You bought a couch a few years ago for $500. Now, at the time of claim, that old couch is only worth $300, as it is used and depreciated. If you had Actual cash value coverage, they would pay you $300, regardless if you can find a similar couch for that price or not. With Replacement Cost coverage, they would pay you to buy a new couch of similar kind and quality at today's prices. (This could be $500 like you paid originally, or possibly more, should inflation be a factor.)