Buying a home means that you will be required by a lender to have home insurance. It provides protection for you in the event that anything should happen to your home. The protection can cover many things – or a few – depending on what kind of coverage you have. If you are either about to buy a home insurance policy, or have forgot what your policy covers, here is some help for you to understand some of those terms.
Before you start, though, you should have a real good idea of what your house and outbuildings are worth. This will enable you to look at the various terms and understand which form of insurance, and how much you need from the start.
Actual Value Versus Replacement Value
These are the two ways that you can be covered in a home insurance policy. Actual value means that you assign a fixed value to your home, and you will be covered only up to that amount. However, know that this also includes depreciation, meaning that the older your house and possessions are, the less you will receive. Certainly this is the less expensive way to go, and many states no longer offer it, but you could end up getting less than 50% of what you paid for...
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