As property value increases, do you need to increase your insurance coverage?
One of the best aspects of real estate investing is the potential for large increases in property value, leading to a great return on your investment. As these property values increase, it is important to keep an eye on your insurance coverage to make sure that you are properly covered in case of a catastrophe.
The answer to this question isn’t always as simple or easy as knowing if your tenants want to improve their credit score with rent. Of course, they do! Rent credit services that include past and ongoing rent credit reporting are of great value to your tenants. The answer to that question is always yes!
Do I Need More Insurance?
The answer to this question isn’t always yes. To know if you need more insurance, it is important to understand what your insurance covers and why.
Homeowners insurance is a safety net that will reimburse you the cost of your home in the event it is destroyed or made uninhabitable. It allows you to rebuild and start fresh, exactly like past and ongoing rent reporting services. These credit rent services allow your tenants to rebuild and improve their credit score with rent payments they are already making.
There are three main types of coverage for home insurance.
- Replacement Cost
Replacement cost is determined by the value of your home and all of the belongings inside of it without taking into consideration depreciation.
- Actual Cash Value
Actual cash value is coverage that calculates the value of your home and its belongings based on their purchase price and factoring in depreciation on everything.
- Extended Replacement Cost
Extended replacement cost is the most comprehensive of all types of home insurance because it insures you for the replacement of your home, as it was, regardless of the costs to rebuild it. That means that you can get your home rebuilt exactly as it was, even if the costs to do so equal more than the value of the home.
Does My Increased Property Value Affect My Replacement Cost?
No! The value of your home doesn’t change the cost to replace it. What does affect it drastically is the cost of materials and labor to rebuild your home. This is good news! That means that even if your home has increased in value by 35%, your insurance coverage may still be sufficient.
If the cost of materials and the availability of workers to rebuild your home has risen, then you may need to review your insurance policy. The best way to do this is to speak to a local builder who can give you an accurate idea of the replacement cost of your home by square foot. Your insurance company should be able to help you determine this as well.
Rebuilding can be a challenge. Some people are rebuilding and improving their credit with rent payments through past and ongoing rent credit reporting (which can be simple and easy with rent credit services from CreditRentBoost.com). Others are rebuilding their homes after a disaster.
Don’t make any of these processes harder than they need to be! Find out if you need to increase your insurance coverage for your properties today.
CreditRentBoost.com Allows Your Tenants to Increase Their Credit Score with Rent Payments!
Just like how your insurance will allow you to rebuild your home if it is necessary, CreditRentBoost.com allows tenants to use past and ongoing rent credit reporting to improve their credit scores. With rent credit services from CreditRentBoost.com, you are giving your tenants a second chance. Reach out today!