When comparing quotes for homeowner's insurance in Connecticut, make sure to compare the terms and conditions of each policy with other policies that have similar terms and conditions. If there is a big difference between insurance quotes, it could be because each company has a different way of valuing property.
When it comes to homeowner's insurance, insurance companies usually use one of two ways to figure out how much they will pay out in case of a loss. Check your policy to see which of the valuations is used. This will affect both your insurance premiums and the amount of money you get back when you file a claim. Here's how they're valued:
Actual Cash Value (ACV): For this type of valuation, the insurance company will take the current cost of replacing your home and subtract the value of how much it has lost in value over time. If you live in an older home, the difference between the market value and the depreciated value of your home could be big.
- Replacement Cost: With replacement cost, the insurance company will pay you the amount it costs to rebuild or replace your home with materials of the same kind and/or quality as those used in the house before the loss. Depending on how old the house is, some building materials may no longer be made, so the insurance company will pay for similar ones. Because they don't take out for depreciation, you'll do better than if the actual cash value was used.
The annual premiums for a policy with replacement cost valuation will be higher, but it is well worth the extra money to be made whole again in case of a loss. Your home is a big investment that you should take care to protect.
When looking for homeowner's insurance, make sure to put the policies next to each other and compare their terms and conditions. A simple difference in valuation can make a big difference in how much your insurance policy is worth and how much it costs.
