Coverage for house and property

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Updated: 3/27/2003 1:09 pm
The most complete property coverage for your house is a form of replacement coverage. This coverage is usually equal to the cost of completely rebuilding your home in the event of a total loss, which should not be confused with the market value of your home. Replacement coverage offers reimbursement for losses only on the basis of actual cash value. The disadvantage with actual cash value coverage is that it takes into account the amount of depreciation on the damaged item from the time it was new. In other words, you would receive less than it would cost to rebuild your home. It is recommended that you insure your home for between eighty and one hundred percent of its replacement value or of the cost of rebuilding. Coverage at eighty percent is often sufficient because insuring the land or foundation, which is typically twenty percent of the total property value, is not always necessary. It is important to understand that under most policies, the coverage you have on your home directly affects the amount of protection you can have on its contents. Usually, your personal property is covered for up to half of the value for which your home is insured. For more information about homeowner's insurance, contact an insurance agent in your area.

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