Understanding Home Insurance – Market and Construction Values
According to the Information Pulse Survey, recently conducted and released by the Insurance Institute, almost 50% of homeowners surveyed had a fundamental misunderstanding about the amount of homeowners insurance they should carry. These consumers believed that their home insurance policies should be pegged to the market value of their homes. Unfortunately, home values have declined in many areas since the housing crash began in 2007. Understand Market versus Construction Value with Home Insurance
In some areas, market values have decreased by more than 50%. Some consumers in these areas have responded by lowering the amount of insurance they purchase. This may be a result of a general desire to economize during hard times, or it may be linked to their belief that if their home is worth less, they do not need as much insurance coverage. Either way, reducing coverage can be a serious mistake. In a worst–case scenario, it can even be a catastrophic one.
Market Value Versus Construction Value
Nobody wants to see their home value decline, but one thing to keep in mind is that market value usually represents a highly theoretical number in any case. Take the situation of an individual who bought a home for $400,000 in the late 1990s. By 2005, the market value of the home may have reached $600,000, but the only way to actually realize the gain would have been to sell the house. Until such a sale, that extra $200,000 is merely theoretically possible. Similarly, if the home today is worth only $300,000, there has been a $100,000 “loss,” but again, this loss is just a theory assuming the house is not sold. The value may recover back to the original sales price in the next few years, in which case the homeowner will not have lost any actual money on the transaction.
If a home’s value fluctuates according to the data given in the example, how much insurance should a homeowner carry? In other words, which figure should a homeowner use for insurance purposes? The answer may surprise many homeowners: none of them.
That’s right – none of them. Insurance is not designed to protect the “market,” or theoretical sales value of a home. It is instead designed to help a homeowner have sufficient funds to repair or completely rebuild a home should it become partially or completely damaged due to an event such as a fire or windstorm.
The home should, therefore, be insured for its “construction value,” or how much money it would take in order to completely reconstruct the structure. In many areas of the country, the construction value of a home is much less than its market value. This is due to the fact that the market value also includes the value of the land it sits on, and the land, of course, will still be there after a fire or windstorm. In places such as San Francisco, California, the land value may represent three–fourths or even more of the total market value of a home.
Life Insurance – Essential for Financial Security
Life insurance is an uncomfortable topic for many people. Thinking about it inevitably also involves thinking about the death of a beloved spouse or other loved one, or even your own death. Life Insurance for Financial Security A large proportion of people who need to consider their life insurance needs more closely tend to put off the task for as long as possible.
This is unfortunate because it can frequently mean that such people end up paying more for life insurance than they need to. Being willing to investigate different life insurance policies can sometimes mean a significant cost savings. This leads to a situation in which the family still has adequate coverage in case something should go wrong and a breadwinner should die during his or her prime earning years. Whether or not that happens, the family also has additional discretionary income generated by the fact that they are paying less for the life insurance itself. This is the best way to go, obviously. Life is for the living and prudent families protect both their present and their future by comparison shopping for life insurance and reviewing their policies regularly to make sure they are still a ‘match’ for the family’s changing needs.
Life Insurance: Not Optional
Research studies have found that more than 90% of Americans are aware of the importance of life insurance, describing it as something they “should have.” Less than that number, unfortunately, actually possess a policy, and of that number, many have only the policy that is provided by their employer – in many cases, wholly paid for by the employer as well.
This leads to a situation in which many Americans who could benefit from life insurance are either uninsured or under insured. The typical employer–paid life insurance benefit in the United States is a policy worth $50,000. This is nowhere near the amount of coverage that the average family should carry, but for tax reasons it is often the policy limit chosen by the employer.
Therefore, even those who already believe they have life insurance are likely to not have a realistic amount. These people would benefit from purchasing a private life insurance policy to augment the one provided by their employer, but they may be reluctant to look into the matter either because the subject is uncomfortable or because they believe that life insurance is cost prohibitive.
Fortunately, life insurance is actually a very affordable product that is made even more accessible than previously through life insurance comparison websites that allow consumers to quickly and easily investigate the various premiums they may be charged for different types and amounts of coverage. These sites also allow consumers to compare the rates of various companies offering life insurance to the general public.
Prices from one company to the next are far from uniform, as most comparison shoppers discover within the first few minutes of looking online for a life insurance quotes. To protect yourself fully, be sure to choose your policy from among companies that have high ratings from the independent agencies that evaluate the quality of life insurance coverage in the United States.
Drivers who compare car insurance quotes are smart individuals who know it pays to shop for the right thing, not just take one sales pitch. Every insurance company advertises their insurance and how great it is, and while it might be true for some drivers it is not true for every driver. Just like everything else in life every one is different and so is every driver and this is why drivers need to get quotes and shop for the right insurance to fit them. This can be an easy task and an educational one. It can be one that affords you insurance protection that you might not have if you had not gotten quotes and compared them with each other to find the proper one for your vehicle. Some of the drivers who get quotes have new cars and some have older cars, it does not make a difference, what makes a differences is that they have the right coverage for their needs.
There are also people who get quotes that make a lot of money per year and ones that make very little per year. The salary that a person makes has nothing to do with whether they are a wise shopper when it comes to car insurance. A shopper that wants the best coverage that they can get and sometimes it is for the amount of money that they can afford. There are many drivers who use their vehicle to drive to work and home as well as other errands, then there are some drivers who will only use their vehicle on the weekend if they are going out of town, so each of these drivers is wise to get quotes because they have different needs when it comes to insuring their vehicle. The driver who is wise enough to obtain insurance quotes will be rewarded with an education in what their policy will cover should they go with any of the companies as well as what the premium will cost but this is not the only important things.
One other thing that is important from now on this driver will be able to choose the proper insurance coverage because they have been educated in comparing policies. Life continuously changes and often with these changes the need for changes in an auto insurance policy will need to be changed and each time it should not have to be a difficult decision. Using quotes to make an educated decision is fast, it is easy and it will provide the best coverage because it was not the only choice. It came from comparing quotes and with it the driver has learned how much protection they really need to be safe on the road. As well as safely protected if they have the misfortune of being involved in an accident to be fully protected by their auto insurance company and not running the risk of being sued by other motorists involved in the accident.
The way to know how to choose car insurance wisely is to compare the ones you have gotten. This car insurance comparison, when each feature is looked at there will be some that show a difference and the difference may not be price and cheap is not always good.
One insurance company might have a cheaper price but they may not have as good of a payout price in case the driver is involved in an accident and there is someone injured. This means they may not have a sufficient amount of medical coverage or damage coverage in case you are involved in more than a fender bender. This could end with the driver being sued personally and this is not what a driver wants that is paying car insurance. Another thing might be the deductible; this is the amount of money that will need to be paid prior to the insurance company beginning to pay on a claim. This can range from a few hundred to a few thousand and that can make a large difference to a driver depending on their income and the age of their vehicle. A driver should feel that the company would not only protect them but that they have all of the coverage that they need for their own protection.
When getting quotes and comparing them it is not very difficult to see what they offer and what they do not and as you compare each along with the driving habits you have and the amount of miles you might put on your vehicle you will come to an informed decision and one that you will feel comfortable with. There is also one other auto insurance comparison benefit, if you have several quotes and you have questions about any of the items they offer you are then informed enough to call the insurance company. Instead of listening to them list what they offer over the telephone where you might forget the questions.
You have all the information in your hands and can ask the pertinent questions that will relate to your driving habits, driving record and auto. By doing this you can have answers to the questions without all the other information that might make you more confused. Which means that by the time you are off of the telephone you may not have your main concerns answered. It is a wise shopper that asks for insurance quotes so that they have all the information they need to make the right decision for their car insurance and their driving habits, which might differ from other drivers. As no two people are the same neither are any two drivers, one driver might travel one mile to work while another might travel ten miles.
For these reasons you will know how to choose car insurance company from the quotes that will educate you in what coverage you will have to protect you and your vehicle.