Cheap home insurance can be a dangerous things. If a company is advertising
cheap home insurance, it may be that you are not getting the right coverage and
you won't know it until it comes time to make a claim.
One way in which some companies can offer cheap home insurance or home
insurance at a cheaper rate is by offering you actual cash value coverage
instead of replacement cost coverage. Actual cash value coverage does cost less
but it pays less if you need to make a claim. Actual cash value coverage will
only pay you the cost of the item based on what you paid for it when it was
originally purchased, less depreciation. So, if you paid $10,000 to have a new
roof put on and five years later a fire destroys the roof, you might end up
only being reimbursed around $8,000 for the roof because of depreciation.
Replacement cost coverage, on the other hand, would reimburse you for what it
would cost to replace or repair the roof at the time of the covered loss.
Obviously, since this type of coverage pays more, it typically costs a bit more
to purchase. But, if cheap home insurance means not having the right coverage
to protect you if you ever need to make a claim, then you're really not saving
anything by buying cheap home insurance. What you want is to find the best
value in home insurance for your home insurance dollars.
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