Determining the value of your possessions for Homeowners Insurance

By Compuquotes Team on March 27th, 2008
Homeowners Insurance

One of the many things that will be asked of you when you apply for home owners insurance is the estimated value of your home and its contents. The value of the house itself is determined by an adjuster who will use the current market and trends to determine the value, coupled with the information of your mortgage and its length and rate. However to determine the value of your possessions, you are pretty much on your own to hire an appraiser or to make a best guesstimate of your possessions' value.

The first thing you need to understand is that you will have to make a choice in your home owners insurance as to how it will cover your possessions - either the market value of your items or the replacement cost. The market value will replace your items based on the current market value for the exact same item - so your 10 year old couch won't be worth very much at all. Replacement value is the cost to replace your items - replacing a couch (regardless of age) is now worth a whole lot more.

The higher the value of your possessions, the more you will have to pay for your insurance. However, you need to make sure that you have adequate insurance to replace your belongings in the event of a fire, theft or damage.

There are a few other factors that you will have to consider that will impact the overall cost of your home owners insurance. The primary one, other than the value of your possessions and the type of insurance you want to have, is the claim deductible that you will pay if you have a claim on your insurance. A deductible is the amount of money that you will pay, or that will be deducted, from the overall cost of your claim payout. Deductibles can run anywhere from $100 to $2,000 and more and the higher your deductible, the lower your payments.

It's important when deciding on the deductible that you will choose for your home owners insurance to take into consideration how much money you can afford to lay out if you were to have a claim, or if you had a total loss, what item would you not have replaced because you couldn't afford to? If you deductible is high, for example, $2,000, what item in your home, or items would you not be able to replace for those funds, or, could you afford to spend $2,000 in the event of a total loss?

These are all reasons why, as you purchase things for your home, that it is important to keep receipts and a record of how much items cost you. This will also help to determine the overall value of your possessions.

If you have special possessions, you may need to buy extra insurance for those specifically. Especially if they are high in value or are nearly irreplaceable.

It's best to talk to your insurance agent about the type of home owners insurance you will need for your home - there may be some things that you are overlooking with the costs of your home's items. It can be difficult to estimate the cost of replacing all the things in your home, but your insurance agent will be able to help you with that, or put you in touch with a private appraiser to do the job.

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