Home Replacement Cost vs. Market Value: What’s the Difference?
Whenever you purchase a new homeowner’s policy or want to evaluate coverage on your current policy, you’ll always want to know how to value your home to ensure you are covered properly. The problem faced by consumers is there are numerous ways to determine your home’s value. Depending on who you ask or where you look these numbers can be all over the place. That begs the question, “What’s the difference, and which one is right”.
Let’s face it, moving to a new home can be stressful. With long checklists and seemingly endless packing, insurance might not be top of mind. However, it’s one of the most important items to tackle to ensure your family and belongings are properly covered.
Step One: Secure Insurance for Your New Home
In most cases, you will be required to show proof of insurance for your new residence before moving in. This could be homeowners insurance for a new house, renters insurance for a new apartment, or a variety of other options. Finding the correct coverage can be both confusing and time-consuming if you don’t know where to look. The following are a few things to keep in mind as you obtain a new policy:
Understand what kind of policy you need for your new home.
Homeowners Insurance: You need this type of insurance if you are purchasing a single-family home. It will provide coverage for the house, your personal belongings, liability exposure, and more.
Renters Insurance: This is what you will need if you are renting a house, apartment, or condo. It will give you coverage for your belongings and liability exposure.
Condo Insurance: If you are purchasing a condo or townhome that does not require full homeowners insurance, meaning that the HOA has a policy that covers the exterior of the property, then this is the type of insurance you will need. This policy will provide coverage for liability exposure and your personal belongings, along with some building materials for the inside of the condo.
Do not expect coverage or price to be consistent with what you have for your current home. Prices for home insurance can vary wildly due to factors such as location, size, age, and condition of the home.
Check with your current insurance agent to see if they can find a favorable option for your new home insurance.
Get quotes from an independent agent. An independent agent will be able to shop with multiple companies on your behalf so you don’t have to. This is typically the best way to find the most favorable option when it comes to price and coverage.
Don’t wait until the last minute! You will often get better rates if you purchase insurance over a week before you need it. If you wait until the day before you move in or close on your home, you are likely to pay more for the same coverage.
Step Two: Update Your Car Insurance
Just like with home insurance, location is a huge factor when it comes to car insurance. At the very least, you will need to call your current insurance company and have them update your address to your new home. This becomes a little more complicated if you happen to be moving to a different state. With differences in laws and regulations in a new state, you will be required to get a new policy as opposed to simply updating the one your currently have.
After updating the address on your policy, you may notice a change in your premium, even if you are moving within the state. The most fitting insurance carrier for your car insurance at your prior residence may not be the best fit for where you are moving to. It’s a good idea to shop the market and get a feel for what price range is favorable. Check with your current agent to see what options they have for car insurance at your new home.
Step Three: Cancel Your Current Home Insurance Policy
There’s much to get done when moving, and one of the most commonly forgotten checklist items is canceling current insurance policies. It is important to note that your mortgage company, apartment complex, condo association, or HOA cannot cancel your insurance on your behalf. It is up to you to contact your insurance company promptly to let them know that you moved and no longer need the policy. This is something you want to do after securing insurance for your new home to ensure that you are not paying for two insurance policies. You’ll want to ask the insurance company to cancel your policy on the same day your new policy is set to begin.
After canceling your insurance policies, you should expect to receive a pro-rated refund for any unused premium that you have already paid. This means that if you have a 12-month homeowners policy with a $2,000 premium, and you have only had the policy for 6 months, you will receive a refund of around $1,000 after your cancelation. You can use this refund to cover your new policy’s premium, or it can help fund some of the expenses of moving.
Overall, buying or renting a new place usually includes several moving parts, but getting insurance squared away does not have to be complicated. Visit our Digital Agent to get a quote on your new home or reach out to your insurance agent to update your policies and shop around further.
The contents of this article are meant as general information to help you understand personal lines insurance and not specific to a particular policy. Policies, coverages and discounts can vary by state and insurance carrier. To understand your coverage, you should speak directly with a licensed insurance agent or read your full policy contract. Call your agent or contact us at (833) 779-4090.
Home insurance premiums have been on the rise in recent years. If you’ve noticed your rates going up, you’re not alone. Many homeowners are seeing increases, even if they haven’t filed a claim. Rates can increase for several reasons. Some are personal, like expired discounts or prior claims.
