“The dwelling portion of your policy is only for the replacement cost of the primary structure of your home and is not impacted by the market value or purchase price.
evaluates the replacement cost of your home, they run a calculation based on factors like:
- Square footage
- Quality of building materials
- Availability of building materials
- Cost of labor
These factors fluctuate over time and are not impacted by the market value of your home.
There is an insurance term called the 80% rule. This means that your home must be insured for at least 80% of the replacement cost for damages to be paid to the total limit of the policy. If an insurance policy is less than 80% of the replacement cost, they will only receive a percentage of the dwelling portion of the policy.
For example, let’s say the replacement cost of your home is $300,000. This means your home must be insured for at least $240,000, which is 80% of the replacement cost. (It’s always best to insure your home at 100% replacement cost). If there is a loss that equals $200,000, you will receive a claim check for $200,000.
If your home is insured for $210,000 (70% of the replacement cost), then you would only receive a claim check of $147,000 (70% of replacement cost) for your $200,000 claim.
If you are worried about the cost of your policy, try bundling your auto and home policies together. Getting home and car insurance quotes online
is an easy way to get a multi-line discount
Using the free Jerry
app will help make this happen! Jerry collects auto and home quotes from over 50 carriers and brings the lowest available rates right to the app on your phone.”