Home Insurance

Question: What kind of home insurance should I have?

Answer: A standard policy protects against several natural disasters and catastrophic events, and covers your personal belongings.  But it will not guard against earthquakes, floods, war, and nuclear accidents.  The policy can be expanded to include these disasters as well as coverage for such things as workers' compensation.  In fact, the lender may require that you purchase flood or earthquake insurance if the house is in a flood zone or a region susceptible to earthquakes.

Question: What is guaranteed replacement cost insurance?

Answer: The most comprehensive insurance policy is guaranteed replacement cost coverage, which will pay to rebuild your home even if the cost to rebuild is more than your policy limit.  This kind of coverage is more expensive and can cost from about $400 to $1,000 a year or more, depending on the area and the price of the home.  However, even if you can afford it, this insurance is not available everywhere or for every property.  For example, older homes may not be eligible.  And some big insurance companies have begun to limit the amount they will pay to 120 percent of the policy's face value.

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