Dwelling Coverage - This is the most important number on a homeowners policy. It is the maximum amount the insurance company will pay to have a home rebuilt. While many insurance carriers will pay out replacement cost value (RCV), sometimes a policy is written where it will pay out actual cash value (ACV). This is a much lower payout, and could cost thousands! Also, home prices have been going sky high in recent years. Back in the mid 2010’s, it was common to have the dwelling coverage be roughly $100/sq ft. For example, a 2,250 sq ft home would have a dwelling coverage of $225,000, and that was fine. Nowadays, that size home should have double that dwelling amount. If it stayed at $225,000, and the home burned down, it might cost $400,000 to rebuild. In this scenario the insurance company is required to only pay out a maximum of $225,000, leaving $175,000 in lost equity! Do you have enough dwelling coverage? At Texas Edge, we know about the changing market conditions, and will usually quote dwelling coverages on the higher end. RCV vs ACV - Replacement cost value vs actual cash value. The value to replace something can be much different (and usually much higher) than the value of an item. This can be applied to the roof of your home. For example, let's say you have a 30 year roof that costs $30,000 to replace currently, but it's 15 years old. A licensed adjuster might say “well, it's 50% through the life of the roof, so it's worth $15,000, and since you have an ACV policy, the insurance company will pay $15,000, minus the deductible of course”. If you had an RCV roof, the insurance company would pay $30,000, minus the deductible. In this case, having an ACV vs RCV policy would “cost” the homeowner $15,000 in the event of a loss. At Texas Edge, we quote RCV policies for dwelling and roof the vast majority of the time. 1%, 2%, and higher deductibles - The deductible is the initial cost to repair/replace that is paid by the homeowner. The traditional deductible is 1%, which means 1% of the dwelling coverage. For example, a home with $450,000 in dwelling coverage would have a 1% deductible of $4,500. If the policy is a 2% deductible, then the initial out of pocket costs would be $9,000. Texas Edge has all of the tools, but we will normally quote 1% unless there is a carrier restriction or other external requirement requires greater than 1% Learn More...