Almost 4 years into the houseing "crash" and the need for vacant home insurance is still as strong as ever. What's more, most "normal and traditonal" homeowners insurance companies still do not offer vacant homeowners insurance products, even to long term and existing customers.
In most large homeowner's insurance companies the product does not even exist. In most States, clients are forced to go into the specialty market and the surplus lines market to purchase a decent vacant home insurance policy.
For those that own a home that is expected to be empty for over 90 days, the same "buyer beware" advice exists today as it did four years ago. If you are shopping for vacant homeowners insurance please be aware that most policies are limited and in scope and not full, all risk, vacant home insurance policies.
What's more, these limited policies are still expensive. When looking for a policy make sure it's an all-risk vacant home insurance policy and it's also a replacement cost policy.
Showing posts with label replacement cost. Show all posts
Showing posts with label replacement cost. Show all posts
Vacant Home Insurace: Be Careful What you are Buying
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Labels:
actual cash value,
insurance,
loss,
replacement cost,
vacant,
vacant home,
vacant homowners insurance
A big difference in the quality of policies is the difference between a policy that pays on a actual cash value basis "ACV" and one that pays on a replacement cost basis. ACV is defined as replacement cost at the time of loss minus physical depreciation. Replacement cost is the amount it would cost to replace the property at the prices in effect on the date of losss. Depreciation is the cost of wear and tear on the property.
A policy that pays on a replacement cost basis will replace damaged property wtih like kind and quality without taking into account depreciation, and is therefor superior.
A policy may also call for losses to be paid on a functional replacement cost basis. Functional replacement cost is just an alternative form of valuation of property that is used in some insurance policies. It is used when the original insured property can be replaced with a functionally equivalent property, but not physically idential, at a lower cost. This is a step up from ACV but not as good as a full replacement cost policy.
Most vacant homeowners (or vacant dwelling) policies are ACV and the buyer must be wary.
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