Home Insurance

Home insurance protects your home, belongings, and financial well being by covering unexpected losses from events like fire, theft, or severe weather. It’s designed to help you recover quickly and confidently, ensuring you have the resources you need when the unexpected happens. Understanding what your policy covers can help you choose the right protection for your home.

Structural Coverage

Your homeowner’s insurance should provide enough coverage to rebuild your home at today’s construction costs. This amount should not include the value of the land, nor should it be based on what you originally paid for the home. The cost of rebuilding may be higher or lower than your purchase price or its current market value.

What Affects Rebuilding Costs?

Several factors influence how much it will cost to rebuild your home:

• Local construction prices
• Total square footage
• Type of exterior construction (frame, masonry, brick, stone, veneer)
• Architectural style (e.g., ranch, colonial)
• Number and finish quality of bathrooms and rooms
• Roof type and materials
• Additional structures (garages, sheds)
• Special features (fireplaces, exterior trim, custom or arched windows)
• Custom-built areas (e.g., kitchens)
• Home improvements or additions

Standard homeowner’s policies typically cover losses due to fire, lightning, hail, explosions, and theft. They do not cover flooding, earthquakes, wear-and-tear, or damage from lack of maintenance. Flood insurance is available through the National Flood Insurance Program (NFIP) and select private insurers.

Replacement Cost Policies

Most homeowner’s insurance policies offer replacement cost coverage for structural damage. Replacement cost policies pay to repair or replace damaged property using similar materials without deducting for depreciation.

Guaranteed or Extended Replacement Cost

After major disasters, construction costs often rise due to demand for materials and labor. If your policy limit isn’t high enough, you could be left underinsured. Extended replacement cost coverage typically provides an additional 20% or more above your coverage limit. Guaranteed replacement cost policies cover the full cost of rebuilding, regardless of the increase. Make sure to ask your agent whether these coverage options apply to your policy.

Building Codes

Building codes evolve over time. If your home is severely damaged, you may be required to rebuild to meet updated code standards. Standard policies often do not cover these additional expenses, even if you have guaranteed replacement cost coverage. An Ordinance or Law endorsement can help pay for these code-related upgrades.

Inflation Guard

An inflation guard endorsement automatically adjusts your policy’s dwelling limit at renewal to reflect inflation rates. This helps ensure your coverage remains adequate over time.

Older Homes

Older homes may not qualify for full replacement cost coverage. Instead, insurers may offer modified/replacement cost policies, which repair or replace features with modern materials rather than original ones (e.g., using drywall instead of plaster).

Coverage varies significantly by insurer. Some companies fully insure well-maintained older homes, while others limit coverage due to the cost of replicating historic features.

Personal Belongings

Most policies cover personal property at 50–70% of your dwelling coverage amount. These limits appear on the Declarations Page under Section I, Coverage C.

To determine whether you have enough coverage, complete a home inventory listing your possessions and their replacement costs.

Replacement Cost vs. Actual Cash Value

You can insure belongings under:

• Actual Cash Value (ACV): Pays to replace items minus depreciation
• Replacement Cost: Pays the full cost of replacing items with new ones

For example, if a fire destroys a 10 year old TV:

• Replacement cost coverage pays for a brand-new TV
• ACV pays only what the used TV was worth

Insuring High Value Items

Policies often limit coverage for items like jewelry, silverware, artwork, furs, and other specialty items. If these limits are insufficient, you can purchase a personal property floater or endorsement, which insures items individually or as a collection, usually with no deductible.

You may need receipts or a professional appraisal to establish value.

Additional Living Expenses (ALE)

If a covered disaster makes your home uninhabitable, ALE coverage pays for temporary living costs, including hotel stays, meals, and related expenses. Most policies cover around 10% of your dwelling limit, though higher or unlimited options may be available. Contact your insurance agent to confirm your coverage details and duration.

Liability Coverage

Liability coverage protects you from lawsuits for bodily injury or property damage caused by you, your family, or your pets. It covers legal defense costs and damages you are legally required to pay.

Most policies provide at least $100,000 in liability coverage, but many experts recommend $300,000 to $500,000 or more.

Get a Quote

Contact Aspen Insurance Agency today for a quote or more information.

About Aspen Insurance Agency

Aspen Insurance Agency is based in Denver, Colorado, and serves clients nationwide. As a family owned agency, we work with multiple insurance carriers to offer affordable and comprehensive insurance solutions. We provide personal, commercial, and professional insurance to residential and commercial clients, helping you secure the coverage you need at the lowest possible cost.