The purchase of a house is generally the largest investment of anyone’s life. And the home in which your family lives must be protected. Avoiding risk and selecting an appropriate amount of insurance coverage best accomplishes this. For homes in and around the Blue Ridge, GA area, the insurance professionals at The Insurance Mart are ready to help homeowner’s with their insurance needs, including guidance regarding the three valuation methods that can be used to safely estimate the value of the items to be covered by their homeowner’s policy.

Replacement Cost

Replacement Cost is the actual cost to buy the necessary materials and fund the labor costs to restore the property to its undamaged status.  It is noted that homeowner’s insurance policies are written with a maximum provision that limits the policy’s payout, to protect the insurer from dramatic market fluctuations.

Actual Cash Value

Actual Cash Value can be simply calculated by subtracting the depreciated value from the item’s replacement cost. An Actual Cash Value policy will have a lower payout than the Replacement Cost, however, they are not written with maximum payout provisions. 

Market Value

The Market Value of a home is the indicated value of a home on the open market if a similar match could even be found. It might appear that the Market Value approach is the fairest method however, the American Insurance Association cautions homeowners to opt out of this method.  Market Value includes the cost of land, which would have no need to be rebuilt. 

The Take-Away

Before deciding upon which valuation method to use for your home’s insurance coverage in and around Blue Ridge, GA, reach out to a licensed agent at The Insurance Mart to allow them to assist in the entire insurance process.