Property damaging disasters and incidents are happening across the United States and people in Nevada are taking notice. In an instant, a home can be severely damaged if not outright destroyed by a fire, an unexpected weather event or other unexpected occurrence. For protection, it is imperative to have insurance.
Disputes over insurance are common and when purchasing a policy, people need to know from the outset what will be covered. Those who already have a policy and are making a claim might not be fully aware of how the process works. When buying the policy or during a disagreement with the insurer as to how much will be paid, it is essential to be aware of the basics.
Dwelling insurance and what it covers
Insurance agents are expected to advise consumers as to the level of coverage they need. In a worst-case scenario when the entire property is destroyed, homeowners need to know they are adequately shielded and will make as high a recovery as possible. There are two options with the home and a person’s belongings: replacement cost or cash value.
A home with damage that makes it uninhabitable will need to either be rebuilt or the owner paid in cash what it was worth. Replacement cost is how much it will be to reconstruct it with the same or similar materials that were used before. This does not deduct the depreciation. Any home will have depreciation from when it was built, but it can generally be higher the older a home is.
People frequently make the mistake of equating replacement cost with the property’s market value. The market value adds the land itself – not just the home. Also, the real estate market itself is crucial in determining how much the property would be worth if the person were to sell it. With actual cash value, the cost of repairing or replacing the home – minus its depreciation – is calculated.
Property owners should be protected
It is important for homeowners to keep track of their insurance coverage. They should know how much they will receive in the event of disaster and the potential reduction in value based on depreciation.
Those who are already wondering what will happen to them after a catastrophic event could be blindsided by disagreements with the insurance company as to what the payout will be. There could even be disputes where the insurer tries to find ways not to pay at all. Understanding insurance law and dwelling protection can be complex and being fully prepared for every eventuality is a good place to start.
