How to Estimate Insurance Values
Your homeowners insurance policy is probably something that you’d never want to find yourself using. But even if you do have to use it, make sure that you know what’s useful for and how it can help you recover your losses. Getting as close as possible to the value of your belongings and that of your property when estimating insurance values will save you a lot of money and a lot of trouble if you’d ever lose your belongings or home to disaster or theft.
Step 1
If you want to buy the right type of coverage for your home, then you need to estimate the value of its structure. If you make the mistake of undervaluing your home, then you’ll have inadequate coverage when filing a claim. If you value it too high, then you’ll just pay oversized deductibles and very high premiums.
According to State Farm Insurance, it’s best that you get an estimated replace cost for your property so that you can purchase the right amount of coverage for it. This information can usually be provided by a licensed appraiser or contractor. If your home was built recently though, your mortgage will be enough. On the other hand, if it’s been several years since you built or bought the property, remodeling and the fluctuations in the cost of materials may affect the cost. Under these circumstances, your home’s replacement cost can be determined with the help of your insurance agent.
Step 2
Have your home’s contents adequately evaluated in order to learn more about the amount of coverage you need. According to the NAIC, it’s best to perform a home inventory so you can account for possessions in each room in your property. This way, it’ll be a lot easier to determine the value of the items or purchase price and get adequate coverage. To get the most accurate number, be sure to use purchase receipts.
For common items, including shoes and clothing, it’s recommended that you determine an average price per item and then multiply that number accordingly (based on the number of items you have). When tallying up your items, an essential distinction is actual value, but also the replacement cost. This cost represents the cost of purchasing your items back new, while the actual value is the value you’re items are currently worth. If you have older items, specifically electronics, the difference is usually quite significant, since depreciation drastically reduces their value over the years.
Step 3
If you want to properly estimate insurance value, then you need to identify any items that aren’t covered under a typical homeowners insurance policy. Coins, jewelry, antiques and collectibles aren’t covered by it and the same goes for the items that are part of your home based business and inventory. While it’s true that estimating the replacement cost of such items is simple, it’s recommended that you have a certified statement of value or appraisal. Be sure to speak with your insurance agent to see if you require an order so you can have these items covered properly.
While completing your home inventory, be sure to take pictures. They’ll come in handy to the insurance agent who is going to require them to verify antiques, pricey appliances, jewelry and home upgrades that may call for extra riders.
Copies of your possessions and home inventory should also be made and stored safely in a safe deposit box outside your property. If they are stolen or destroyed, then these items are going to make it easier to file your claim.
In general, the contents in your home are insured for market value only. This means that if you want to file a claim for a TV that cost $3,000 dollars, then you’ll only be reimbursed for that TV’s current market value. If you’d like to ensure your items are insured for their replacement cost, it’s recommended that you mention this is the type of coverage you require.
