You really don’t want to do without it anymore.
The essentials in a nutshell Homeowners insurance is an expense to plan for if you own your own home. Suze Orman recommends purchasing an extended replacement cost policy, which protects you against rising construction and material costs.
If you own a home, you need homeowners insurance. Not only is it usually a requirement to get a mortgage loan, but it’s also something you must have in the event your home suffers damage, whether it’s from a flood, fire, or weather-related event.
Contents insurance can also protect you if someone is injured on your property. Suppose you didn’t clear your driveway of ice and a delivery man slips and injures himself. Your homeowners policy could cover their medical bills so you don’t have to pay out of pocket.
But taking out household contents insurance is not enough. Also make sure you have the right home insurance. And if you ask finance guru Suze Orman, there’s one key role you really should be on the lookout for.
Protect yourself from inflation
Consumers have seen firsthand how inflation can drive up the cost of almost anything. In the past year and in transition, inflation has risen at an unusually fast rate. But even in periods of more moderate inflation, spending generally tends to increase naturally over time. And that extends to the cost of building and/or replacing your home.
That’s why Suze Orman insists it’s important to get home insurance with extended replacement cost coverage. This could help you fully rebuild your home if it is damaged or destroyed, despite the higher cost.
It is common for home insurance to offer periodic replacement cost coverage. But in this scenario, Orman warns, your payout is capped at 100% of the original value of your home and items in it like furniture and electronics.
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Extended replacement cost coverage protects you against rising costs related to your home and its contents. With this type of coverage, you may receive a payout of up to 125% of the original value of your home and belongings. And that’s important because over time, the cost of replacing your home and belongings could increase. But with extended replacement cost coverage, you’re covered in that regard.
Read the details carefully
Owning a home is a huge expense. So it’s only natural that you’d want to save money on home insurance to free up money for other expenses like property taxes, maintenance, and repairs.
But instead of opting for the cheapest possible home insurance, it might be worth paying a small premium for extended replacement cost coverage. This way, if the cost of replacing your home increases over time, you’re still protected. Not every policy includes this feature, so pay attention to the fine print when purchasing home insurance.
And if you already have homeowners insurance, you may want to ask about upgrading your policy to include extended replacement cost coverage. Home insurance is designed to give you peace of mind. It’s worth paying a little more to really get the protection you need.
Our tips for the best household insurance
There are many home insurance policies to choose from. We’ve researched dozens of options and have shortlisted our favorites here. Looking for a Green Build discount or easy bundling guidelines? Do you want a user-friendly interface? Read our free expert review and request a quote today.