What’s dwelling replacement cost coverage?
How much protection dwelling coverage comes with depends on the type of dwelling coverage that a policy has. These should be evaluated in light of the potential cost of rebuilding a house, which can go up over time and spike if a disaster affects much of the state.
Actual cash value coverage normally insures a home for up to the value that it’d sell at. This normally ensures that homeowners can pay off their mortgage and receive their equity, but it might not cover the cost of rebuilding a house.
Replacement cost coverage normally insures a home for up to what it’d likely cost to rebuild. This should make it likely that a destroyed house can be rebuilt to its pre-disaster state.
Guaranteed/extended replacement cost coverage normally adds more coverage onto what replacement cost provides. For instance, guaranteed replacement cost might increase the maximum limit by 25%. This further ensures that a home can likely be rebuilt even if construction costs spike. Not all insurance companies offer guaranteed or extended replacement cost coverage.
An insurance agent who specializes in homeowners policies can help Massachusetts residents evaluate these options and their dwelling coverage needs.
What are the various abbreviations for home insurance policies?
Homeowners policies are often abbreviated by insurance professionals. The standard abbreviation consists of “HO” and a number. Some abbreviations that homeowners might see when checking policy options are:
- HO-1 is usually for named perils policies that provide only very limited protections
- HO-2 is usually for named perils policies that provide a few more protections
- HO-3 is usually for open perils policies that substantially increase protections
- HO-5 is usually for open perils policies that further increase protections
- HO-7 is usually for policies that insure manufactured and mobile homes
- HO-8 is usually for policies that insure historic dwellings and other older homes