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Home Insurance to Value Ratio Explained

The insurance to cost ratio needs to be evaluated every time your make changes to the home or purchase a new piece of equipment. The insurance company has no way of keeping your coverage complete without you letting them know when more or less coverage is required. For instance, if you add a room on your home, the insurance policy needs to be updated to reflect the new value. If it is not updated and your house burns down, you may lose the entire value of the addition with no way to recoup the loss.

The insurance to cost ratio needs to be evaluated every time...

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Homeowners Insurance-to-Value Ratio Explained

The insurance-to-value ratio is a way to calculate whether or not a home is properly insured. It is the ratio of the amount of insurance coverage you have on your home compared to replacement cost of your home. The reason this is important is two-fold: if the ratio is too high, you are probably spending more than you need to on your home insurance, and if the ratio is too low you could be faced with huge out of pocket expenses if you suffer a loss, even one that damages but does not destroy the home.

The insurance-to-value ratio is a way to calculate whether o...

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