Home Insurance and The 80% Rule for Improvement Costs

home insurance

For most people, their home is the largest investment and savings. As such, they try to protect their investment in two ways – by carrying out home improvements and by insuring their property. As the owner of Ellijay, Georgia real estate you want to maximize your returns from both these steps.

For this you need to understand the 80 percent rule that home insurers apply when making payouts against claims. Simply put the 80 percent rule says that a home insurance company needs to pay the full value of the damage to your home only if you have cover for at least 80 percent of the value of the home. This means that if your home is valued at $500,000 you should have cover for $400,000 before the insurance company is obliged to pay the full cost of the damage. This rule applies even if the value of the damage is less than the insurance cover you have purchased. The insurance company will only pay a proportionate amount for the damage.

home insurance

Annual Evaluation

Given this rule, every home owner must evaluate their home insurance policy cover annually. For this the home owner needs to obtain the correct value of the home at current rates. This should include any appreciation in value as well as any home improvements made during the course of the year.

For instance, if you have upgraded the flooring of your home or the cabinetry, your new home insurance should reflect this. By increasing the insurance coverage, you will be in a better position to replace any damage that occurs to your home because of unforeseen events.

A prudent homeowner in Ellijay, Georgia should be aware of the current market price of their home as well as its replacement cost. Both these numbers need to be factored in when deciding on the insurance cover for your home.

Additions and Extensions

Another reason why the home insurance policy and cover amount could change would be any additions or extensions made to the Ellijay, Georgia property. A homeowner might have added a detached garage to be able to park additional vehicles or a patio or sundeck to be able to enjoy the gorgeous outdoors. These additions and extensions to the home should be mentioned when the home insurance policy is renewed and the cost of replacement should be factored into the value of the coverage.

By taking active steps to monitor the home insurance cover instead of renewing it automatically each year, a homeowner can better protect their investment.

While nothing can replace the emotional value of the home if it is damaged or compensate for it, a home owner can certainly ensure financial security for themselves and their family by possessing adequate home insurance cover. Some home insurance companies also pay for alternative accommodation until the damage is repaired. This too can be a comfort factor if your Ellijay, Georgia home is damaged by fire, wind, or a natural calamity.

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