According to the most recent investigation conducted by the National Association of Insurance Commissioners (NAIC) a vast percentage of homeowners in the United States believe that their home insurance covers a wide array of damage factors. However, you must be aware that standard insurance policies do not cover damage caused by floods, earthquakes, drainage failures, termites, mold and more. “Many homeowners can go through serious financial struggles due to the lack of understanding and interpretation of their insurance policies,” says Walter Bell, president of NAIC and Alabama Insurance Commissioner. “It is extremely important for consumers to analyze their insurance policies and make detailed questions to their insurance agents.”

Actual Cash Value vs. Replacement Cost
Find out if your insurance policy covers your home’s actual cash value in the market or the replacement cost. The actual cash value is the total amount of money needed to repair the damage done to the home and replace its contents after an evaluation. The replacement cost is the amount of money needed to replace or reconstruct a home or repair the damage caused by natural disasters, without deducting its devaluation. Bell states that “in case a home loss is covered, the actual cash value in the market could be several thousand dollars less than the calculated amount for the replacement cost.”

Useful Tips

1. Increase your home insurance coverage by increasing your home value and acquiring high value property.
2. You are responsible for what happens on your property. In many states, you are legally responsible for any person who consumes alcohol and suffers an accident on or after leaving your home. Your policy should protect you against any lawsuits resulting from this civil responsibility.
3. Create an inventory of all your personal belongings, including a photo of each room of the house. Also, save the receipts for all valuable objects in a safe place away from your home or apartment. This would simplify the legal process in case you need to file a claim. The NAIC also recommends consumers to be aware of fraud insurance companies that sell false insurance policies. Before buying an insurance policy, call your state’s insurance department and confirm if your company is legitimate and is authorized to sell insurance policies in your state.

For more information visit: www.InsureUonline.org/espanol

The NAIC is an organization whose goal is to protect consumers and help maintain financial stability within the insurance industry.