House fell, money stuck! Know the real value of your "palace"
Your dream home, a symbol of your hard work! This is the place where you live peacefully, spend beautiful moments with your family. But have you ever thought that if any natural disaster or accident happens, will you be able to build this "palace" again? The answer is, probably not!
Why? Because the market value of your house is completely different from its replacement cost.
Today we will tell you how to estimate the replacement cost of your house. Why is this information important for you? Read further to know this...
What is Replacement Cost?
Suppose, your house is completely destroyed in an accident. Now the amount of money required to rebuild it is the replacement cost of that house. This does not include the cost of the land, but only the cost of rebuilding the house.
Why is it Important to Know Replacement Cost?
Your home is your biggest asset. If it is destroyed in a disaster, it can be very difficult for you to rebuild it. Especially if your home insurance only covers the market value.
The market value is often determined according to the surrounding area, it does not take into account the features of your house and the construction cost. But the replacement cost includes the actual cost of rebuilding your house.
Therefore, by knowing the replacement cost, you can get your home insurance accordingly. This will ensure that you get enough money to rebuild your house in case of a disaster.
How to Estimate Replacement Cost?
To perfectly calculate the replacement cost of your house, getting a professional appraisal is the best option. But if you don't want to get this work done right now, there are some easy ways to get a rough estimate.
Using square foot cost:
- First find out the area of your house in square feet.
- Now find out the average cost of building a house per square foot in your area. You can get this information by doing online research or by talking to a local builder.
- For example, suppose the area of your house is 1500 square feet and the average cost of building a house in your area is Rs 1200 per square feet. So the replacement cost of your house will be around Rs 18 lakh (1500 x 1200).
More Ways to Estimate Replacement Cost
In the last chapter, we saw how you can estimate the replacement cost of your home using square foot cost. But this is just one way. Today we will tell you about some more ways by which you can make this estimate even more accurate.
1. Talk to a Builder
Contact a local builder and tell them about your house. Tell them the design, size, construction material, and other details of your house. An experienced builder can give you a good idea of how much it will cost to rebuild your house.
2. Do Online Research
There are many tools and websites available on the Internet that can help you estimate the replacement cost. In these tools, you have to fill some basic information, such as the size, age, and construction material of your house. After this, these tools give you an estimate.
3. Ask Your Home Insurance Company
Your home insurance company can also give you an estimate of the replacement cost. These companies often provide such information so that you can choose your insurance cover wisely.
4. Get a Professional Appraisal
As we mentioned earlier, getting a professional appraisal is the best option to get an accurate estimate of the replacement cost. The appraiser will inspect your home and take into account the construction materials used, finishing, and other details. They will then give you a report that will give you an accurate figure of the replacement cost of your home.
Keep Your Replacement Cost Updated
Replacement costs change over time. The replacement cost of your home can also change as construction costs, material prices, and other factors change. So, re-evaluate your replacement cost every few years to ensure your home insurance cover is always up-to-date.
Choose Home Insurance Coverage Based on Replacement Cost
So far we have understood what replacement cost is and how to estimate it. Now it is time to set your home insurance cover accordingly.
What is Replacement Cost Coverage?
Replacement cost coverage is an option in your home insurance policy. If your home is destroyed in a disaster, under this coverage your insurance company will give you enough money so that you can rebuild a similar home. There is no limit to the current market value of your home.
Why Choose Replacement Cost Coverage?
Replacement cost coverage is important because it provides you with enough money to rebuild your home. If your home is old or has some special features, then its market value may be less than its replacement cost. In such a situation, if your insurance covers only on the basis of market value, then you will not get enough money.
How to take advantage of replacement cost coverage?
Get an accurate estimate: Get an accurate estimate of the replacement cost of your home. We have mentioned some ways to do this in the previous chapters.
Increase your insurance cover: Talk to your home insurance agent and increase your cover according to the replacement cost.
Update your cover regularly: Replacement costs change over time. So, keep updating your cover every few years.
What to Keep in Mind with Replacement Cost Coverage
Deductibles: Note that your home insurance policy may have a deductible. This is the amount you will have to pay yourself after a claim.
Normal wear and tear: Some insurance companies do not cover normal wear and tear. So, read the terms of your policy carefully.
Additional coverage: You can also take additional coverage in your policy, such as flood coverage or earthquake coverage.
Tips to Reduce Home Insurance Premium
So far we have understood what replacement cost is and how to set your home insurance cover accordingly. But do you know that you can also reduce your home insurance premium? Today we will tell you some tips by following which you can save on your insurance premium.
1. Bundling
If you bundle your home insurance policy with car insurance or other types of insurance, you can get a discount. This is a popular way to reduce the premium.
2. Use Security Devices
If you use an alarm system, security cameras, or other security devices in your home, you can get a premium discount. These devices protect your home from theft or other risks, which also reduces the risk for the insurance company.
3. Make Home Improvements
Making some home improvements can also reduce your insurance premium. For example, if you install a fire sprinkler system or leak detectors in your home, you may get a discount.
4. Review Your Policy
Review your home insurance policy every year. Your home may have changed over time, making your policy no longer the best fit for you. By reviewing your policy, you can ensure that your cover suits your needs and that your premium is reasonable.
5. Understand Your Policy Limits
Understand the limits of your home insurance policy. Know what type of damage your policy covers and what its limits are. If you understand your policy limits, you can choose your policy accordingly and avoid unnecessary coverage.
6. Compare Different Companies
Get quotes from different companies for your home insurance and compare their policy terms and premiums. This can help you get the best deal.
7. Get Online Quotes
You can get a quote for your home insurance by visiting several websites online. This is a convenient way to compare premiums from different companies.
How to File a Home Insurance Claim
So far we have understood what replacement cost is, how to set up your home insurance cover accordingly, and how to reduce the premium. Now it is time to know how to file a home insurance claim if your home is destroyed in a disaster.
What to Do to File a Claim
Deal with the emergency: First, deal with the emergency. If there is a fire or any other disaster in your home, give priority to your safety and the safety of your family.
Contact your insurance agent: Contact your insurance agent as soon as possible and tell them about the emergency.
Fill a claim form: Your insurance company will provide you with a claim form. Fill this form completely and attach the required documents.
Take the help of a claim inspector: Your insurance company will send a claim inspector who will inspect your home and assess the damage.
Follow the claim process: Communicate regularly with your insurance company during the claim process. Submit all required documents on time and cooperate with the claim inspector.
What to Keep in Mind During the Claim Process
Gather evidence: Gather evidence of the damage, such as photos or videos. This will help strengthen your claim.
Submit all documents: Submit all required documents on time. This may include a copy of your insurance policy, evidence of damage, and other related documents.
Communicate on time: Communicate regularly with your insurance company. If you need any information or have any questions, ask them.
Help of a lawyer: If you face any problems during the claim process, you can seek the help of a lawyer.
Conclusion
Making a home insurance claim can be a challenging process, but if done correctly, it can be beneficial for you. By following these tips, you can make your claim process easier and get timely payments.
Remember, home insurance protects your biggest asset. So, take it seriously and understand the terms and conditions of your policy.
