One of the MANY confusing parts of being a homeowner is an appraisal. You have to understand what it is, how it relates to your home’s protection, and why it matters to you when filing a claim after a disaster or break-in.
Understanding a home appraisal
Below are the essential details you must know to help you get the right kind of protection in place (with a clear understanding of why it’s the right protection).
The different kinds of appraisals
There are three main types of appraisals done regarding your home.
1 - Buying your home
The first is when you’re buying a home. It helps you understand the true value of your potential new home and helps sort out financing with your lender.
2 - Refinancing your home
The second kind is when you are refinancing your home. This could be taking out a second mortgage or simply refinancing your current mortgage. Its role is the exact same, just done in a different context.
3 - Insurance appraisal for your home
The third one is an appraisal for insurance, which is what we’re going to talk about in detail. The actual role itself is similar to the top two, but its reasoning is different.
How an insurance appraisal works
An insurance appraisal is done after a disaster or break-in which results in a lot of damage to your home. Since the “value” of your home is now significantly different than the home that was insured, an appraisal helps you assess what’s “left” and how your insurance policy can repair the damage.
An appraiser would come onsite and do a full, proper appraisal to see what damages have happened and how your home’s value is now impacted. The point of this is to understand what costs are covered by the insurance provider and which ones are out of pocket.
A huge component of this is ensuring that you have the proper kind of home insurance policy in place to make sure that your insurance provider is found to be responsible for the repairs to help get your home back to its best shape.
Do your research beforehand
An appraisal like this is done to limit the insurance policy’s payouts. So, talk to your insurance agent to understand what you have coverage for, and what kind of coverage you should have to ensure that you aren’t paying out of pocket for repairs and recovery for your home, should the moment come for an appraisal. Knowing that you have proper insurance and protection in place matters a lot more than you might think!
Replacement cost insurance is different than appraisal insurance
Your home insurance appraisal will be used if you have this particular kind of coverage. The more common option is replacement cost coverage. Both of these kinds of protection have different needs/uses/benefits so understanding the differences between when one is used over the other starts with a clear understanding of what each is!
The right homeowner’s insurance policy will offer detailed and accurate protection. However, the key to that is understanding what coverage you have, how it protects you, and if that’s right for your needs. My Harbour Insurance Services is here to answer those questions for you, with you. We know that insurance can be a struggle, let us help. Contact us at (281) 520-4090 with any questions you may have. You can also get a free quote here, online, no hassles.