When the Wind Blows…How Well are You Covered?

Tornadoes that recently whipped through Alabama and six other southern states, leaving a trail of death and destruction in their wake, have served as a wake-up call to many residents about the importance of quality home insurance. Now more than ever, people are starting to sit up and take notice of the possible threats and asking the all-important question: are tornadoes covered by my home insurance coverage?

To the relief of those asking, the answer is: yes. But that isn’t where the home insurance coverage concerns of residents who live in tornado-prone regions should end. In order to be assured that their coverage will, in fact, be enough, consumers are reminded that they should select replacement cost coverage for their homes – not actual cash value coverage.

The different could be huge, especially if a person’s home is completely destroyed. Replacement cost coverage and actual cash value are distinctly different.

• Replacement cost coverage will pay the customer the full cost of home replacement on today’s market.
• Actual cash value coverage will only pay the customer what their home was originally worth, less depreciation.

Needless to say, there are price differences for either plan, with replacement cost coverage being more -- and in some cases, insurance companies don’t even offer replacement coverage and only give the option of actual cash value. For this reason, consumers are advised to compare home insurance coverage yearly to ensure the best quality home insurance available to them.