Why is homeowners insurance coverage important?
Despite the COVID pandemic, the housing market in Florida has continued to be in good health. Even Zillow forecasts that prices will rise 4.6% this year.
Closely related to the home sale market is the insurance market. For each home acquired through a mortgage loan and for which a down payment of less than 20% of the sale price is paid, lenders will require homeowners’ insurance.
A fundamental coverage included in homeowner’s insurance is Dwelling Coverage or home coverage. This is the part of the homeowner’s insurance policy that covers the cost of rebuilding the home in the event it is completely damaged by one of the perils covered by the insurance, such as wind, hail, or fire.
It is important to become familiar with this coverage and understand that it covers the cost of rebuilding, that is, the amount of money required to rebuild your home from scratch, where it takes into account the price of materials and labor.
The cost of rebuilding should not be confused with the market price of your home, since the latter also includes the value of the land. Rebuild value is everything on top of that land that is not lost in a fire or destroyed by a hurricane.
On the other hand, Dwelling Coverage is important because most contracts have determined that personal property coverage constitutes about 50% of housing coverage. In other words, if your Dwelling Coverage is $ 150,000, your personal property coverage can reach up to $ 75,000.
Keeping the Dwelling Coverage updated is key, it is the guarantee that you have to raise your home from scratch, if necessary, with the funds from your insurance.