What is this magical extra 50% coverage?

If your agent tells you that you can reduce the coverage because of the “extra 50%” endorsement, the warning sirens should start ringing in your ears. This is the unforgivable sin in the insurance business – lowering coverage to reduce cost. You’ll be happy about saving $100 in premium right up until your house burns down. So, what is this endorsement?

The Replacement Cost Endorsement is real, and is offered by all quality carriers. It typically adds 50-100% more coverage on top of Coverage A, or the Dwelling amount. The cheap and TOTALLY wrong way to insure your house is this: Your home should be insured for $300,000. So you buy a policy for $200,000, plus the “extra” 50% ($100,000) and bingo - $300,000! And then your house burns down and costs $350,000 to rebuild because lumber costs have gone up, or labor costs have skyrocketed, or roofing materials are scarce, etc… That extra $50,000? Get out your wallet.

The right way to do it is this: Your house should be insured for $300,000, so you buy a policy with $300,000 of Coverage A. The house burns down and costs $350,000 to rebuild. But you called Purves & Associates, so have the right coverage to begin with, PLUS the additional 50% ($150,000). And since your Loss of Use coverage amount (which pays for your extra costs to live away from home while rebuilding) is a percentage of Coverage A, you have plenty of that coverage, too!

It always pays to trust a pro! Contact us today at 800.681.2025, or click here, and we’ll discuss the right coverage amounts for your home, cars and other liabilities, and we’ll shop the marketplace to make sure you get the best deal possible.