My House Isn’t Worth That

Writing a homeowner policy can be tricky in regards to making the sale for a policy with replacement cost value on the home.  The most common statement made by a homeowner when reviewing a replacement cost coverage quote is, “My house isn’t worth that.”  What have you found to be the best response to that statement?  It can be an even more difficult conversation if the home owner is in construction/renovation.  They can get deals on the cost of materials and discounts on labor.  So why should they pay the premium to insure their home for the higher value?

Well, they may be able to ‘rebuild’ with discounts but what if the home has to be torn down, the land regraded and THEN the home rebuilt?  Actual cash value coverage won’t pay for all of that.  Are they prepared to pay for that out of their pocket?  If the damage is due to a natural disaster and materials and labor are scarce are they prepared to pay more than what they could at any other given time due to need inflation?

To be more prepared for these conversations it is helpful to have a clear understanding of what the full difference is between Actual Cash Value and Replacement Cost Coverage.  Follow the link to an article written by an insurance publication for further definitions and explanations.  You want to be prepared for making that sale and help that homeowner get the kind of coverage they need.


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