What's the difference between basic and comprehensive home insurance coverage?

[David Ounanian]

When it comes to your home, the right insurance policy can make all the difference. Here’s a quick guide to help you choose between Basic and Comprehensive Coverage and understand your options for Cash Value vs. Replacement Cost policies.

Basic vs. Comprehensive Coverage

• Basic Coverage: Covers specific risks like fire, theft, and certain weather damage. This is a more affordable option but only protects against named events.
• Comprehensive Coverage: Often called “all-risk” coverage, this protects against most unexpected events, except exclusions like flooding or earthquakes, which usually require separate policies. It’s a top choice for those wanting broader protection.

Cash Value vs. Replacement Cost Policies

• Cash Value: Reimburses the current, depreciated value of an item. For instance, if hail damages your roof, you’d receive payment based on the roof’s current value, considering its age.
• Replacement Cost: Covers the full cost of a new item. In the case of a damaged roof, replacement cost insurance would pay for a new roof, regardless of its age.

The right combination of coverage and policy type can safeguard your home and investments from costly surprises.