Choosing Cash or Replacement Value for Your Home Owners Insurance in Austin, TX

by | Aug 5, 2015 | Insurance

Purchasing a home is the largest investment most people will ever make. For this reason, it’s important to protect that investment as best as possible. This means making sure that the home is properly insured. That’s why Home Owners Insurance in Austin TX is so vital.

If the home is financed, the lender will require the homeowner to have insurance. In cases where the home is no longer under financing, while it’s not required, it’s a good idea to have home insurance. Should some sort of disaster or catastrophe happen and cause a large amount of damage to a home, a typical homeowner may not have the amount of money available to pay for the repairs that are necessary.

While there are many different facets of Home Owners Insurance in Austin TX. One aspect that deserves a bit of time and attention is replacement cost versus actual cash value. This aspect of home insurance is largely relegated to the possessions inside of the home rather than the structure of the home.

Actual cash value is typically a cheaper type of insurance. It’s very attractive to people looking to save money on home insurance, but it may not be the best option. The reason for this is that an individual may have a very nice television but that television may be a few years old. With actual cash value policies, should that TV become damaged because of a flood, fire or natural disaster, its current value is all that the insurance company will give an individual for replacement.

With replacement costs, the approach is a bit different. Replacement costs will provide a homeowner with the compensation necessary to purchase an item that is equivalent in function to the item that was destroyed. This means that if it’s a large screen TV from two years ago, while the actual value of the item may not be very high, the insurance company will give the individual the amount of money necessary to replace the TV with something more current.

This is just one small aspect of home insurance. There are many other things to consider, which is why it’s good to speak with an insurance expert like Patrick Court. With his help, you can determine what type of home insurance policy is right for you so that your home is properly protected.

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